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On the Concavity of the Consumption Function with a Quadratic Utility under Liquidity Constraints

Shin-Ichi Nishiyama and Ryo Kato

No 274, TERG Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: This paper demonstrates the concavity of the consumption function of infinitely living households under liquidity constraints who are not prudent - i.e. with a quadratic utility. The concavity of the consumption function is closely related to the 3-convexity of the value function.

Pages: 10 pages
Date: 2011-09
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