A tractable model of buffer stock saving

Arbeitspapier

We present a tractable model of the effects of nonfinancial risk on intertemporal choice. Our purpose is to provide a simple framework that can be adopted in fields like representative-agent macroeconomics, corporate finance, or political economy, where most modelers have chosen not to incorporate serious nonfinancial risk because available methods were too complex to yield transparent insights. Our model produces an intuitive analytical formula for target assets, and we show how to analyze transition dynamics using a familiar Ramsey-style phase diagram. Despite its starkness, our model captures most of the key implications of nonfinancial risk for intertemporal choice.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFS Working Paper ; No. 2009/14

Classification and Topics

• Classification: Wirtschaft ; Optimization Techniques; Programming Models; Dynamic Analysis ; Consumer Economics: Theory ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
• Subject: Risk ; Uncertainty ; Precautionary Saving ; Buffer Stock Saving ; Sparen ; Kassenhaltungsansatz ; Entscheidung bei Unsicherheit ; Zeitpräferenz ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Carroll, Christopher D. ; Toche, Patrick
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (where): Frankfurt a. M.
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/43240
• URN: urn:nbn:de:hebis:30-68339
• Last update: 10.03.2025, 11:46 AM CET