On the conditions for existence of precautionary savings
This paper shows that if the signs of the first three derivatives of the utility function are assumed to be invariant in the consumption level, then nonsatiation and risk aversion are sufficient conditions for the presence of precautionary saving. Moreover, a similar set of assumptions ensures that the necessary conditions for decreasing absolute risk aversion and for decreasing absolute prudence are automatically satisfied.
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|Date of creation:||2000|
|Publication status:||Published in Journal of Economic Theory, May 2001, v. 98, iss. 1, pp. 189-93|
|Contact details of provider:|| Postal: Via J.F. Kennedy 6, 43100 PARMA (Italy)|
Web page: http://economia.unipr.it/de
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