Arbeitspapier

A tractable model of buffer stock saving

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.

Language
Englisch

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

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

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

Handle
URN
urn:nbn:de:hebis:30-68339
Last update
10.03.2025, 11:46 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Carroll, Christopher D.
  • Toche, Patrick
  • Goethe University Frankfurt, Center for Financial Studies (CFS)

Time of origin

  • 2009

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