On the concavity of the consumption function
WebThe parameter b governs the degree of concavity of the consumption function. The higher b, the sooner the derivative of approximate consumption function converges to its limit, •. Carroll and Kimball (1996) show that uncertainty reduces consumption for each level of cash-on-hand. So the higher is uncertainty, the larger has to be b. WebConcavity relates to the rate of change of a function's derivative. A function f f is concave up (or upwards) where the derivative f' f ′ is increasing. This is equivalent to the …
On the concavity of the consumption function
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WebOn the Concavity of the Consumption Function. Christopher Carroll and Miles Kimball. Econometrica, 1996, vol. 64, issue 4, 981-92. Date: 1996. References: Add references at … Webliquidity constraints generate a concavity in the consumption function. However, ana-lytics of the concavity due to liquidity constraints has remained unknown until recently. Carroll and Kimball (2001) made the –rst important attempt in setting an analytical foundation and showed the concavity of the consumption function when the …
Web1 de out. de 2012 · Our paper is to consider a finite-horizon model with the time-additive utility and the time varying discount rate. With the assumption of the concavity of … Web28 de jul. de 2024 · Consumption Function: The consumption function, or Keynesian consumption function, is an economic formula representing the functional relationship between total consumption and gross national ...
Web1 de mai. de 2024 · If the consumption function in Lemma 1 is concave for arbitrary distribution of (β, R, Y), then u exhibits constant relative risk aversion (CRRA). Conversely, if u is CRRA, then the consumption function of the consumption-saving problem (1) is concave. Proof. Let c, s be the consumption and saving functions. Webcome shocks for which the consumption function is convex. Then, I extend the concavity result to dynamic settings and show that concavity is preserved if 11 > and 2 and > 1 2 3:4 Furthermore, if income shocks are independent consumption function is always concave when 1 2: The intuition for my result is as follows. An agent prefers early resolu-
WebCarroll and Kimball (1996) prove that the consumption function is concave if infinitely-lived risk-averse households have a utility function which exhibits Hyperbolic Absolute Risk Aversion (HARA), face income uncertainty, and are prudent. However, the empirical evidence is inconclusive about the importance of income uncertainty for households.
Webcient for the concavity of consumption functions in general consumption-saving problems. This paper shows that HARA is necessary, implying the concavity of consumption is not a robust prediction outside the HARA class. Keywords: concavity, consumption function, hyperbolic absolute risk aversion, robust predictions. JEL … fitness warehouse commercialWeb2 de ago. de 2024 · More or less, yes. Making the right assumption on the shape of the utility function allows you to prove existence or uniqueness of the equilibrium. The exact assumption you need depends on what exactly you are trying to prove and how general you want your result to be. In the case of concavity, it also makes the equilibrium easier to … fitness warehouse discount codeWebfunction, but until now there has been no analytical explanation for the concavity of the consumption function that income uncertainty seemed to induce. The idea that the consumption function is concave is an old one, dating at least to the origin of Keynesian macroeconomics: The General Theory of Employment, Interest, and Money emphasized … fitness warehouse coupon codeWeb(1996) show the concavity of consumption functions in nite horizon problems, which implies asymptotic linearity. However, under certain regularity assump-tions,Toda(2024) shows that HARA is necessary for the concavity of con-sumption functions, implying that establishing asymptotic linearity based on concavity is possible only in very special ... can i change my domain name on hostingerWeb1 de mar. de 2024 · Download Citation On Mar 1, 2024, Haoyu Liu and others published On the concavity of consumption function under habit formation Find, read and cite … can i change my departure flightWeb1 de jun. de 2024 · Contrary to the results of a standard consumption-saving model with time-separable utility, we show that the consumer’s consumption function can be … fitness warburgWeb1 de dez. de 2024 · Carroll (1992) observes that many of the differences can be attributed to the concavity of the consumption function under uncertainty, but he does not describe the conditions under which the ... fitness warehouse galion ohio