Optimal savings distortions with recursive preferences
By: Emmanuel Farhi, Iván Werning.
Contributors: Werning, Iván.; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 13720; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13720.
Publisher: National Bureau of Economic Research
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This paper derives an intertemporal optimality condition for economies with private information, focusing on a class of recursive preferences.  By comparing it to the situation where agents can freely save in a risk-free asset market, we derive the optimal savings distortions necessary for constrained optimality.  Our recursive preferences are homogeneous and satisfy a balanced growth condition, while allowing us to separate the role of risk aversion and intertemporal elasticity of substitution.  We perform some quantitative exercises that disentangle the respective roles played by these two parameters play in opt8imal distortions and the implied welfare gains"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 6/6/2008.

Includes bibliographical references.

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