Preferences for risk in a dynamic model with consumption commitments

the consumers who start saving in order to increase consumption of the commitment good in the future become risk lovers. We also argue that such behavior is likely to arise due to the presence of borrowing constraints; therefore suggesting that in the economies with consumption commitments borrowing constraints can make uninsured risk desirable (in contrast, it is known that in standard models borrowing constraints increase the cost of uninsured risk).

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Year of publication:	2007
Authors:	Vereshchagina, Galina
Institutions:	Society for Economic Dynamics - SED

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Extent:	application/pdf
Series:	2007 Meeting Papers.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series 2007 SED Meeting Papers Number 567
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011082098