Multiple Constraints and Hicksian Complementarity: A Generalization and an Application to Portfolio Choice

Ian Steedman (Consumption Takes Time: Implications for Economic Theory, Routledge, London, 2001) has shown, among other things, that when a household chooses amounts of time to allocate to competing consumption activities subject to both a money income constraint and a time constraint, at least two consumption activities must have at least one compensated complement each. This paper generalizes Steedman's result in several directions and uses the generalized version to study compensated complementarity among state-dependent consumption levels and asset purchases in a model of portfolio choice under uncertainty. Copyright Blackwell Publishing Ltd 2003.