Neoclassical life-cycle consumption: a textbook example

Monika BØtler ()
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Monika BØtler: CentER for Economic Research, Tilburg University, and DÊpartement d'Êconometrie et d'Êconomie politique, HEC, UniversitÊ de Lausanne, BFSH1, 1004 Lausanne, SWITZERLAND
Authors registered in the RePEc Author Service: Monika Bütler ()

Economic Theory, 2001, vol. 17, issue 1, 209-221

Abstract: We present a simple neoclassical life-cycle model in continuous time, in which the effects of endogenous labor supply, uncertain lifetime, and family composition on consumption and income profiles are jointly analyzed. Due to a parsimonious specification, analytical solutions for consumption growth are available for constant intertemporal elasticity of substitution preferences. Without relying on borrowing constraints, the model can generate a hump in the consumption profile, and a comovement of consumption and income during working life.

Keywords: Life-cycle consumption profiles; Consumption-income correlation. (search for similar items in EconPapers)
Date: 2000-11-14
Note: Received: June 9, 1999; revised version: October 4, 1999
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Citations: View citations in EconPapers (2)

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