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Under what conditions does an increase in the future income risk (in the sense of second order stochastic dominance) result in an increase in savings? This paper establishes a novel… Click to show full abstract
Under what conditions does an increase in the future income risk (in the sense of second order stochastic dominance) result in an increase in savings? This paper establishes a novel sufficient condition for the case in which income follows a Markov process. The sufficient condition applies to a broad class of preferences and processes that are often adopted in the applied literature. (Copyright: Elsevier)
Keywords:
markovian earnings;
earnings environment;
saving markovian;
precautionary saving
Journal Title: Review of Economic Dynamics
Year Published: 2018
Link to full text (if available)
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Journal Title: Review of Economic Dynamics
Year Published: 2018
Link to full text (if available)
Share on Social Media: Sign Up to like & get
recommendations!