ANALYTICAL RESULTS FOR A MODEL OF PERIODIC CONSUMPTION

Clare Kelly and Gauthier Lanot
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Clare Kelly: Department of Economics, University of Warwick

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper presents the partial analytical solution to a model of periodic consumption that incorporates imperfect capital markets and uncertainty. Our model assumes that consumption decisions occur more frequently than income receipt. We show that the week specific consumption functions can be ordered. At low levels of wealth these functions exhibit a “ushaped” pattern between income receipts. We show analytically that changes in the level of the borrowing constraint affect only the level of consumption function and not the MPC, whilst mean preserving changes in uncertainty affect both.

Keywords: Analytical consumption function; liquidity constraints; uncertainty (search for similar items in EconPapers)
JEL-codes: D11 D12 D91 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2003
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https://warwick.ac.uk/fac/soc/economics/research/w ... s/2008/twerp673a.pdf

Related works:
Working Paper: Analytical results for a Model of Periodic Consumption (2003)
Working Paper: Analytical Results for a Model of Periodic Consumption (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:673

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