On the concavity of the consumption function with the time varying discount rate

In this paper, we consider a finite-horizon model with the time-additive utility and the time varying discount rate. With the assumption of the concavity of absolute risk tolerance, the concavity of the consumption function has been proved. This result significantly broadens the conclusion of Carroll and Kimball (1996) for the case of the HARA utility function.

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Year of publication:	2012
Authors:	Gong, Liutang ; Zhong, Ruquan ; Zou, Heng-fu
Institutions:	China Economics and Management Academy, Central University of Finance and Economics (CUFE)
Subject:	Consumption function \| Concavity \| Risk tolerance

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Extent:	application/pdf
Series:	CEMA Working Papers.
Type of publication:	Book / Working Paper
Notes:	Published in Economics Letters 117 (2012) 99¨C101 Number 559 3 pages
Classification:	E21 - Consumption; Saving ; C6 - Mathematical Methods and Programming ; D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010819287