On the conditions for existence of precautionary savings

Mario Menegatti

No 2000-EP01, Economics Department Working Papers from Department of Economics, Parma University (Italy)

Abstract: This paper shows that if the signs of the first three derivatives of the utility function are assumed to be invariant in the consumption level, then nonsatiation and risk aversion are sufficient conditions for the presence of precautionary saving. Moreover, a similar set of assumptions ensures that the necessary conditions for decreasing absolute risk aversion and for decreasing absolute prudence are automatically satisfied.

Pages: 43 pages
Date: 2000
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Published in Journal of Economic Theory, May 2001, v. 98, iss. 1, pp. 189-93

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Persistent link: https://EconPapers.repec.org/RePEc:par:dipeco:2000-ep01

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