This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Based on \( \mathbb{E}_{t - i} [\tilde \theta (t)] = \bar \theta \), also the mean of labor’s production elasticity is fixed at \( \mathbb{E}_{t - i} [\tilde \theta (t) - 1] = \bar \theta - 1 \). Furthermore, note that the assumption of Ã(t) > 0 excludes senseless negative total factor productivity. Finally, it is worth mentioning that this understanding of total factor productivity is based on Solow [1957], whereas Sect. 5.3 will address technical progress explicitly with a different implication for the corresponding variable.
However, recently inflation indexed bonds have come into vogue by international treasuries. While France or United States have already issued inflation indexed bonds, Germany is preparing the legal basis for doing so. With maturities of around 30 years these issuances present an obvious candidate for the riskless security in real terms. For further details on the importance of real versus nominal riskless returns see Campbell and Viceira [2001a].
Hence, log utility satisfies all consistency requirements concerning utility functions as explained for instance in Gollier [2001]. Furthermore, it prevents consumption approaching zero as utility derived from it becomes increasingly negative and is not defined for negative values of consumption.
See also Campbell and Viceira [2001a, p. 35] for this interpretation.
See for instance Ingersoll [1987, pp. 238–240].
In essence the result achieved by above two-step procedure could also be achieved by directly integrating across all agents of all generations and giving agents within a generation the same weights. Above remarks on the completeness would allow to follow Constantinides [1982, Lemma 1]. However, the stepwise aggregation is more intuitive.
Rights and permissions
Copyright information
© 2006 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
(2006). Tradable Human Capital. In: Pensionomics. Lecture Notes in Economics and Mathematical Systems, vol 572. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-34669-4_3
Download citation
DOI: https://doi.org/10.1007/3-540-34669-4_3
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-32597-0
Online ISBN: 978-3-540-34669-2
eBook Packages: Business and EconomicsEconomics and Finance (R0)