Optimal Saving with Additive and Multiplicative Background Risk

Artige Lionel
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Artige Lionel: Universitat Autonoma de Barcelona (Spain)

No 2004030, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We study optimal saving when incomes are certain and risk bears on consumption. A key finding is that, with CARA utility and additive uncertain consumption, or CRRA utility and multiplicative consumption, risk-averse individuals do not form precautionary saving as in the standard theory of saving under uncertainty.

Keywords: Consumption; risk-aversion; saving; uncertainty (search for similar items in EconPapers)
JEL-codes: D8 D9 (search for similar items in EconPapers)
Date: 2004-10-01
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2004030

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