The above example usefully highlights the main motives for saving. 1. Consumption tilting motive. The Euler equation implies that the consump-.
First the consumption-tilting motive
We can have positive financial wealth even if there is no bequest motive. assume that there is no tilt in consumption profiles that is ?R = 1.
If ?(1 + r) < 1 the consumption tilting motive implies a downward sloping consumption profile in the absence of a precautionary saving motive (assets would
(2) Consumption smoothing motive. Assume ? (1 + r) = 1 (no consumption tilting motive) and income is stochastic. The Euler equation becomes.
13 sept. 2018 6 This abstracts from possible “tax-tilting” (analogous to “consumption-tilting”). If the government's subject.
5 mars 2011 motive the optimal consumption in the stochastic model is upward tilting (until resources are exhausted and uncertainty is resolved) and.
5 mars 2011 motive the optimal consumption in the stochastic model is upward tilting (until resources are exhausted and uncertainty is resolved) and.
not be the only reason to be concerned about the current account. Other relevant factors income according to the consumption-tilting motive.
decline) outweighs the consumption-tilting motive (associated with movements in the intertemporal terms of trade or consumption interest rate).