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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26483
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| Title: | | How changing prudence and risk aversion affect optimal saving  |
| Authors: | | Bauer, Christian Buchholz, Wolfgang |
| Issue Date: | | 2008 |
| Series/Report no.: | | CESifo working paper 2438 |
| Abstract: | | We show how optimal saving in a two-period model is affected when prudence and risk aversion of the underlying utility function change. Increasing prudence alone will induce higher savings only if, for certain combinations of the interest rate and the pure time discount rate, there is distributional neutrality between the two periods. Otherwise, changes of risk aversion that affect the distribution between the periods must also be taken into account. |
| Subjects: | | Prudence risk aversion saving intergenerational distribution |
| JEL: | | D11 D81 E21 H43 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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