Abstract¶
This paper builds foundations for rigorous and intuitive understanding of ‘buffer stock’ saving models (Bewley (1977)-like models with a wealth target), pairing each theoretical result with quantitative illustrations. After describing conditions under which a consumption function exists, the paper articulates stricter Growth Impatience’ conditions that guarantee alternative forms of stability --- either at the population level, or for individual consumers. Together, the numerical tools and analytical results constitute a comprehensive toolkit for understanding buffer stock models.
BufferstockTheory¶
"This paper builds foundations for rigorous and intuitive understanding of buffer stock' saving models (Bewley (1977)-like models with a wealth target), pairing each theoretical result with quantitative illustrations. After describing conditions under which a consumption function exists, the paper articulates stricter Growth Impatience’ conditions that guarantee alternative forms of stability --- either at the population level, or for individual consumers. Together, the numerical tools and analytical results constitute a comprehensive toolkit for understanding buffer stock models.