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Asian Review of Financial Research, Vol., No..
pp.1977~1986
pp.1977~1986
How To Prepare For Retirement? Optimal Saving, Labor Supply, and Investment Strategy
Bon-chun Koo This research was supported by WCU(World Class University) program through the National Research Foundation of Korea funded by the Ministry of Education, Science and Technology (R31-20007).
Min-seok Kim Graduate Department of Financial Engineering, Ajou University
Jisoo Koo College of Business Administration, Ajou University
Hana Song College of Business Administration, Ajou University
Hyo-bin Yoon College of Business Administration, Ajou University
Hyeng Keun Koo Graduate Department of Financial Engineering, Ajou University
In this paper we study consumption-labor supply decision of an agent who prepares for retirement at a known time in the future. The agent is assumed to have a preference which is represented by a von Neumann-Morgenstern utility function in which the felicity function has constant relative risk aversion over the composite of consumption and leisure. The composite is obtained by a Cobb-Douglas function. A general problem has been studied by Bodie, Detemple, Otruba, and Walter (2004). We contribute to the literature by deriving Slutsky equations and conduct comparative statics. In particular, we show that the wealth eect can exhibit interesting property depending upon the time until retirement, as the interest rate increases.
Bon-chun Koo
Min-seok Kim
Jisoo Koo
Hana Song
Hyo-bin Yoon
Hyeng Keun Koo
In this paper we study consumption-labor supply decision of an agent who prepares for retirement at a known time in the future. The agent is assumed to have a preference which is represented by a von Neumann-Morgenstern utility function in which the felicity function has constant relative risk aversion over the composite of consumption and leisure. The composite is obtained by a Cobb-Douglas function. A general problem has been studied by Bodie, Detemple, Otruba, and Walter (2004). We contribute to the literature by deriving Slutsky equations and conduct comparative statics. In particular, we show that the wealth eect can exhibit interesting property depending upon the time until retirement, as the interest rate increases.
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