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Article Dans Une Revue Economics Letters Année : 2012

Savings behavior with imperfect capital markets: when hyperbolic discounting leads to discontinuous strategies

Résumé

This paper provides a detailed study of a simple life-cycle consumption model with quasi-hyperbolic discounting and an imperfect financial market. It gives a complete characterization of savings behavior. The joint assumptions of quasi-hyperbolic discount factors and no-borrowing constraints may lead to non-convexities in selves' objective functions that may imply discontinuous equilibrium strategies. The savings function may undergo jumps and non-monotonicities when the income or the interest rate reaches a threshold value. These ''anomalies'' may exist even for reasonable parameter values.
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Dates et versions

halshs-00684210 , version 1 (30-03-2012)

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Bertrand Wigniolle. Savings behavior with imperfect capital markets: when hyperbolic discounting leads to discontinuous strategies. Economics Letters, 2012, 116 (2), pp.186-189. ⟨10.1016/j.econlet.2012.02.014⟩. ⟨halshs-00684210⟩
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