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Alfredo Omar Palafox-Roca and Francisco Venegas-martínez
''Average consumer decisions in an economy with heterogeneous subjective discount rates and risk aversion coefficients: the finite horizon case''
( 2014, Vol. 34 No.2 )
This paper aims to study the behavior of the average rational consumer of an economy populated by heterogeneous agents in a finite horizon framework. Heterogeneity takes into account both the subjective discount rate and risk aversion coefficient. Closed-form solutions for the optimal paths of consumption and capital, of the average consumer, are derived. Moreover, a closed form solution for the economic welfare of the average consumer is obtained.
Keywords: Heterogeneous preferences, subjective discount rate, risk aversion coefficient, consumption decisions, average consumer
JEL: C6 - Mathematical Methods and Programming: General
D9 - Intertemporal Choice and Growth: General
Manuscript Received : Nov 20 2013 Manuscript Accepted : Apr 23 2014

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