The Reservation Wage under CARA and Limited Borrowing
نویسنده
چکیده
A continuous-time sequential job search model with savings and CARA preferences is solved analytically without resorting to unlimited borrowing and real-valued consumption. I isolate the effects of limited borrowing and nonnegative consumption as well as risk-aversion on the reservation wage by using a system of ordinary differential equations.
منابع مشابه
On the reservation wage under CARA and limited borrowing
A continuous-time sequential job search model with savings and CARA preferences is solved analytically without resorting to unlimited borrowing and real-valued consumption. I isolate the effects of limited borrowing and nonnegative consumption as well as risk-aversion on the reservation wage by using a system of ordinary differential equations.
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متن کاملReply to Referee Report of September 5 September 5 , 2007
I thank the referee for reading the paper and for alerting me that I have to phrase things more carefully in order to avoid misreading. Main concerns 1. The entire point is based on misreading the paper. The referee interprets the reservation wage R as relating to the unemployed or people engaged in home production, whereas I have written (I quote the entire paragraph, where the reservation wag...
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