On the stability of the CRRA utility under high degrees of uncertainty
AbstractEconomic growth models under uncertainty and rational agents with CRRA utility have been shown to provide quite fragile explanations of consumers.choice as equlib- rium comsumption paths (expected utility) are drastically dependant on distributional assumptions. We show that assuming a SNP distribution for random consumption provides stability to general equilibrium models as expected utility exists for any value of the marginal rate of substitution over time.
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Bibliographic InfoPaper provided by Lancaster University Management School, Economics Department in its series Working Papers with number 615773.
Date of creation: 2011
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