In the first chapter, I develop a representative agent model in which the purchase of consumption goods must be planned in advance. Volatility in the agent's portfolio increases the risk that a purchase cannot be implemented. This implementation risk causes the agent to make conservative consumption plans. In the model, this leads to persistent and negatively skewed consumption growth and a slow reaction of consumption to wealth shocks. The model proposes a novel explanation for the negative relation between volatility and expected utility.
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- Partial requirement for: Ph.D., Arizona State University, 2015Note typethesis
- Includes bibliographical references (p. 97-102)Note typebibliography
- Field of study: Business administration