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Precautionary Wealth Accumulation

Review of Economic Studies 2004 71(3), 769-781
When does an individual's expected wealth accumulation profile increase as earnings risk increases? This paper answers this question for multi-period models where earnings shocks are independent over time. Sufficient conditions are stated in terms of properties of a decision rule for savings and, alternatively, in terms of properties of preferences. Copyright 2004, Wiley-Blackwell.