The marginal propensity to consume and multidimensional risk

Kimball, 1990a and Kimball, 1990b established that income risk increases the marginal propensity to consume if and only if absolute prudence decreases. We characterize decreasing and increasing multivariate prudence and show that a multidimensional risk increases the marginal propensity to consume if and only if absolute prudence decreases with wealth, in the sense that its derivative is negative-definite.

MoreLess

Year of publication:	2013
Authors:	Jouini, Elyès ; Napp, Clotilde ; Nocetti, Diego
Institutions:	Université Paris-Dauphine (Paris IX)
Subject:	Marginal propensity to consume \| Multivariate risk \| Prudence

More details

Series:	Economics Papers from University Paris Dauphine.
Type of publication:	Book / Working Paper
Notes:	Published in Economics Letters, 2013, Vol. 119, no. 2. pp. 124-127.Length: 3 pages
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty ; D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving ; E21 - Consumption; Saving
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010707440