Download or read book Optimal Consumption with Stochastic Income written by Stephen Paul Zeldes and published by . This book was released on 1984 with total page 310 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Consumption with Stochastic Income written by Stephen P. Zeldes and published by . This book was released on 1986 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Consumption and Savings with Stochastic Income and Recursive Utility written by Chong Wang and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a tractable incomplete-markets model with an earnings process Y subject to permanent shocks and borrowing constraints. Financial frictions cause the marginal (certainty equivalent) value of wealth W to be greater than unity and decrease with liquidity w = W/Y . Additionally, financial frictions cause consumption to decrease with this endogenously determined marginal value of liquidity. Risk aversion and the elasticity of inter-temporal substitution play very different roles on consumption and the dispersion of w. Permanent earnings shocks, especially large discrete stochastic jumps, make consumption smoothing quantitatively difficult to achieve. Borrowing constraints and permanent discrete jump shocks can generate empirically plausible values for marginal propensities to consume in the range of 0.2 to 0.6.
Download or read book Optimal Consumption and Savings with Stochastic Income written by Chong Wang and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop an analytically tractable consumption-savings model for a liquidity-constrained agent who faces both permanent and transitory income shocks. We find that risk aversion and intertemporal substitution have very different effects on both consumption and the steady-state savings target. Moderate changes in risk aversion have large effects on consumption and buffer-stock savings. With permanent shocks, it takes many years to reach the steady-state savings target. We also find that large discrete income shocks (jumps) occurring at low frequencies can be very costly. Unlike conventional wisdom, transitory shocks can generate very large precautionary savings demand, especially for low transitory income states.
Download or read book Optimal Consumption with a Stochastic Income Stream written by Bruce L. Miller and published by . This book was released on 1972 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper investigates the optimal consumption strategies of an individual facing a stochastic labor and deterministic capital income stream over an infinite horizon. The main result of the paper is a theorem showing that the optimal amount to consume in the stochastic income case is always less than the optimal amount to consume in the deterministic case where the stochastic income received each period is replaced by its mean. (Author).
Download or read book Consumption Decisions with Stochastic Wage Income written by Fuchun Jin and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, I use an approximate solution to model the optimal consumption when the representative consumer faces labor income uncertainty. This approximate consumption function is based on Zeldes' (1989) numerical solution to the optimal consumption problem with CRRA utility and stochastic labor income. Unlike the certainty equivalence solution, this model assumes that the consumer discounts expected future labor income at a rate higher than the real interest rate. It therefore takes into consideration the precautionary savings of the consumer. The first order implications of the approximate consumption function, with and without the liquidity constrained consumers, are tested using quarterly UDS data. The evidence lends support to the claims of the approximate consumption function, particularly when liquidity constrained consumers are included. The empirical results of this paper imply that current consumption should be Granger caused by variables in the lagged information set. Meanwhile, consumption should be smoother than labor income, even when the latter follows an integrated process. Both implications have been documented in the literature. Based on this evidence, I conclude that the approximate model is a promising way of getting around the difficulties involved in obtaining a closed form solution when utility is of the general decreasing absolute risk aversion type.
Download or read book Optimal Consumption with an Exponential Utility Function written by Alexander Charles Ratnofsky and published by . This book was released on 1973 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper develops a model for the determination of an individual's optimal consumption strategy when he is faced with a stochastic income stream. With the use of an exponential utility function an upper bound on optimal consumption is found. This upper bound is found to increase as future income becomes more certain. The optimal amount to consume when all future income is deterministic is also found. Finally, examples are given to illustrate the results obtained and to highlight the importance of the selection of the various parameters. (Author).
Download or read book Optimal Consumption and Equilibrium Prices with Portfolio Cone Constraints and Stochastic Labor Income written by Domenico Cuoco and published by . This book was released on 1995 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Consumption and Portfolio Choices with Risky Housing and Stochastic Labor Income written by Rui Yao and published by . This book was released on 2002 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Looking for the News in the Noise Additional Stochastic Implications of Optimal Consumption Choice written by Laurence J. Kotlikoff and published by . This book was released on 1984 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: In neoclassical models of consumption choice under earnings uncertainty changes in consumption programs from one period to the next are determined by new information received about future earnings over the period. This proposition suggests testing the neoclassical model by ascertaining whether new earnings information explains consumption choice through time. It also suggests that actual consumption choices imbed extractable information about the extent and time resolution of earnings uncertainty. This paper derives a fairly general theoretical relationship between properly defined innnovations in consumption (noise) and revisions in expectations of lifetime earnings (news). It also clarifies the relationship between testing for the theoretical determinants of consumption and standard Euler tests that focus on theoretical nondeterminants of consumption. The chief prediction of the paper's theoretical results, that noise exactly equals news, is tested using aggregate time series data on consumption and earnings. We find that new earnings information explains only a very small fraction of the variance of aggregate consumption innovations. On the other hand, the extent of suboptimal consumption choice appears to be of little economic significance.
Download or read book Optimal Consumption and Life Insurance with Uncertain Lifetime and Stochastic Income Controlling Leisure Time written by Lise Hemmeshøj Runge and published by . This book was released on 2014 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Consumption with Stochastic Nonstationary Income and Preferences Finite Horizon and Two Interest Rates written by Refael Hassin and published by . This book was released on 1976 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Notes on Consumption Theory written by Giuseppe Travaglini and published by Springer Nature. This book was released on with total page 157 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Two Essays on Stochastic Income Theory written by C. Y. Cyrus Chu and published by . This book was released on 1985 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: future generations is a factor that should be considered in an optimal insurance tax structure.
Download or read book A Stochastic Optimal Control Formulation of the Consumption debt Decision written by and published by Bib. Orton IICA / CATIE. This book was released on with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Consumption with Stochastic Variations written by John T. Lenga and published by . This book was released on 1994 with total page 130 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Income Wealth and the Maximum Principle written by Martin L. Weitzman and published by Harvard University Press. This book was released on 2009-07-01 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: This compact and original exposition of optimal control theory and applications is designed for graduate and advanced undergraduate students in economics. It presents a new elementary yet rigorous proof of the maximum principle and a new way of applying the principle that will enable students to solve any one-dimensional problem routinely. Its unified framework illuminates many famous economic examples and models. This work also emphasizes the connection between optimal control theory and the classical themes of capital theory. It offers a fresh approach to fundamental questions such as: What is income? How should it be measured? What is its relation to wealth? The book will be valuable to students who want to formulate and solve dynamic allocation problems. It will also be of interest to any economist who wants to understand results of the latest research on the relationship between comprehensive income accounting and wealth or welfare.
