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DETERMINANTS OF AGGREGATE WEALTH

Published online by Cambridge University Press:  01 March 2000

Susheng Wang
Affiliation:
Hong Kong University of Science and Technology
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Abstract

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This paper analyzes aggregate wealth based on separablerisk aversion and intertemporal substitution. In an infinite-period overlapping-generations model with survival uncertainty, economic growth, and permanent and temporary income shocks, our closed-form solution permits us to derive rich behavioral conclusions and to assess the relative importance of the major components of aggregate wealth. In particular, the separation of the attitudes toward risk and substitution allows us to disentangle behaviors relating to the intertemporal substitution motive from behaviors relating to the precautionary motive.

Information

Type
Research Article
Copyright
© 2000 Cambridge University Press