Carroll and Kimball (1996) show that the consumption function for an agent with time-separable, isoelastic preferences … always exists a distribution of income risk such that consumption function is not concave in wealth. I also derive suffi … cient conditions guaranteeing that the consumption function is concave if the agent has preferences for late resolution of …

Dictionary of Economics, 2nd Ed. Keywords: Precautionary saving, prudence, consumption function, buffer stock saving Archive http … Buffer Stock Wealth 5 3.1 Concavity of the Consumption Function . . . . . . . . . . . . 7 4 Empirical Evidence 8 4.1 Euler … “consumption function” that provides a complete characterization of the relationship between resources and spending. The critical …