On the Concavity of the Consumption Function with a Quadratic Utility under Liquidity Constraints
This paper demonstrates the concavity of the consumption function of infinitely living households under liquidity constraints who are not prudent - i.e. with a quadratic utility. The concavity of the consumption function is closely related to the 3-convexity of the value function.
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- Christopher D Carroll & Miles S Kimball, 2001.
"Liquidity Constraints and Precautionary Saving,"
Economics Working Paper Archive
455, The Johns Hopkins University,Department of Economics.
- Deaton, Angus, 1991.
"Saving and Liquidity Constraints,"
Econometric Society, vol. 59(5), pages 1221-48, September.
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