Author(s)

Shin-Ichi Nishiyama, Ryo Kato

Bank of Japan, Tokyo, Japan.
Tohoku University, Sendai, Japan.

This paper demonstrates the concavity of the consumption function of infinitely living households under liquidity constraints who are not prudent—i.e. with a quadratic utility. The concavity of the consumption function is closely related to the 3-convexity of the value function.

Consumption Function, Liquidity Constraints

S. Nishiyama and R. Kato, "On the Concavity of the Consumption Function with a Quadratic Utility under Liquidity Constraints," Theoretical Economics Letters, Vol. 2 No. 5, 2012, pp. 566-569. doi: 10.4236/tel.2012.25104.