A new interpretation of the condition for precautionary saving in the presence of an interest-rate risk

This note reconsiders the classical problem of precautionary saving in the presence of an interest-rate risk, and provides a new interpretation of the threshold of 2 for the relative prudence index, which characterizes the necessary and sufficient condition for precautionary saving.

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Bibliographische Detailangaben
Veröffentlicht in:	Journal of economics (Vienna, Austria) Austria), 2017-01, Vol.120 (1), p.79-87
1. Verfasser:	Magnani, Marco
Format:	Artikel
Sprache:	eng
Schlagworte:	Consumption Economic models Economic theory Economic Theory/Quantitative Economics/Mathematical Methods Economics Economics and Finance Game Theory Interest rate risk Interest rates Macroeconomics/Monetary Economics//Financial Economics Microeconomics Public Finance Random variables Savings Social and Behav. Sciences Studies Utility functions
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Beschreibung
Zusammenfassung:	This note reconsiders the classical problem of precautionary saving in the presence of an interest-rate risk, and provides a new interpretation of the threshold of 2 for the relative prudence index, which characterizes the necessary and sufficient condition for precautionary saving.
ISSN:	0931-8658 1617-7134
DOI:	10.1007/s00712-016-0496-2