Hunting For Snipe

Over at Worthwhile Canadian Initiative, Nick Rowe continues to wage his crusade. (See also here, here, here, here, here, here, here, here, here, here).

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Hunting For Snipe

Consumption, Part 2: Concavity

These are some notes on two papers of Christopher Carroll and Miles Kimball: “Liquidity Constraints and Precautionary Savings” (2001) and “On the Concavity of the Consumption Function” (1996).  My only original contribution is to point out that you can extend the (1996) results to any utility function which has the property that the ratio of prudence to risk aversion is a convex decreasing function.

Continue reading “Consumption, Part 2: Concavity”

Consumption, Part 2: Concavity