This paper identifies a new sufficient condition for a prudent agent to have positive precautionary saving in the presence of labor income and interest rate risks of any size. We also provide three economic interpretations for this condition focusing respectively on the marginal effect of saving on total income variance, on the sign of the covariance between total income and the return of saving, and on the effect of saving on the utility premium.

Baiardi, D., De Donno, M., Magnani, M., & Menegatti, M. (2015). New results on precautionary saving under two risks. ECONOMICS LETTERS, 130, 17-20 [10.1016/j.econlet.2015.02.025].

New results on precautionary saving under two risks

BAIARDI, DONATELLA;
2015

Abstract

This paper identifies a new sufficient condition for a prudent agent to have positive precautionary saving in the presence of labor income and interest rate risks of any size. We also provide three economic interpretations for this condition focusing respectively on the marginal effect of saving on total income variance, on the sign of the covariance between total income and the return of saving, and on the effect of saving on the utility premium.
Articolo in rivista - Articolo scientifico
Precautionary saving, Interest rate risk, Labor income risk, Prudence, Utility premium
English
17
20
4
Baiardi, D., De Donno, M., Magnani, M., & Menegatti, M. (2015). New results on precautionary saving under two risks. ECONOMICS LETTERS, 130, 17-20 [10.1016/j.econlet.2015.02.025].
Baiardi, D; De Donno, M; Magnani, M; Menegatti, M
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/107287
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