A foundation for the solution of consumption-saving behavior with a borrowing constraint and unbounded marginal utility

B-Tier
Journal: Journal of Economic Dynamics and Control
Year: 2008
Volume: 32
Issue: 3
Pages: 695-708

Authors (3)

Bobenrieth H., Eugenio S.A. (not in RePEc) Bobenrieth H., Juan R.A. (not in RePEc) Wright, Brian D. (University of California-Berke...)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Models of precautionary saving or storage include cases where the marginal value of accumulated balances is unbounded, with an invariant distribution with infinite mean. Based on a uniform continuity argument, we show that a model of saving with bounded marginal value can be used to approximate the unbounded marginal value function, and the quantiles of its invariant distribution, arbitrarily accurately. These results offer a foundation for a strategy for numerical solution of marginal values in cases where they are unbounded, and for derivation of the quantiles of their invariant distributions.

Technical Details

RePEc Handle
repec:eee:dyncon:v:32:y:2008:i:3:p:695-708
Journal Field
Macro
Author Count
3
Added to Database
2026-01-24