Asymptotic linearity of consumption functions and computational efficiency

نویسندگان

چکیده

We prove that the consumption functions in optimal savings problems are asymptotically linear if marginal utility is regularly varying, or loosely speaking, behaves like a power function for wealthy agents. also analytically characterize asymptotic propensities to consume (MPCs) out of wealth. Our results useful obtaining good initial guesses when numerically computing functions, and provide theoretical justification linearly extrapolating outside grid.

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ژورنال

عنوان ژورنال: Journal of Mathematical Economics

سال: 2022

ISSN: ['1873-1538', '0304-4068']

DOI: https://doi.org/10.1016/j.jmateco.2021.102562