A tractable model of buffer stock saving
- We present a tractable model of the effects of nonfinancial risk on intertemporal choice. Our purpose is to provide a simple framework that can be adopted in fields like representative-agent macroeconomics, corporate finance, or political economy, where most modelers have chosen not to incorporate serious nonfinancial risk because available methods were too complex to yield transparent insights. Our model produces an intuitive analytical formula for target assets, and we show how to analyze transition dynamics using a familiar Ramsey-style phase diagram. Despite its starkness, our model captures most of the key implications of nonfinancial risk for intertemporal choice.
Author: | Christopher D. Carroll, Patrick Toche |
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URN: | urn:nbn:de:hebis:30-68339 |
Parent Title (German): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2009,14 |
Series (Serial Number): | CFS working paper series (2009, 14) |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2009 |
Year of first Publication: | 2009 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2009/08/14 |
Tag: | Buffer Stock Saving; Precautionary Saving; Risk; Uncertainty |
GND Keyword: | Anleihe |
HeBIS-PPN: | 214924424 |
Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
JEL-Classification: | C Mathematical and Quantitative Methods / C6 Mathematical Methods and Programming / C61 Optimization Techniques; Programming Models; Dynamic Analysis |
Licence (German): | Deutsches Urheberrecht |