Excel Sheet for "Consumption With Uncertainty and No Financial Markets"
In this model we alter the benchmark such that the income stream in the second period is uncertain. The consumer lacks access to markets that would allow them to reallocate their income across time or states. Using the model, we can illustrate how the consumer's economic wellbeing depends on both their preferences and their economic outlook, in particular with respect to income volatility. The model is described in Guo and Gilbert (2014) "Demystifying Financial Markets for Saving and Insurance With Numerical Models" Journal of Economic Education.
|Date of creation:||30 Sep 2013|
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