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.
|Date of creation:||Sep 2011|
|Date of revision:|
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- Deaton, Angus, 1991.
"Saving and Liquidity Constraints,"
Econometric Society, vol. 59(5), pages 1221-48, September.
- Christopher D. Carroll & Miles S. Kimball, 2001.
"Liquidity Constraints and Precautionary Saving,"
NBER Working Papers
8496, National Bureau of Economic Research, Inc.
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