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Date | 2024-07-25 |
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Speaker | 전준기 |

Dept. | 경희대학교 |

Room | 27-325 |

Time | 11:30-12:30 |

In this talk, we investigate optimal consumption and portfolio rules for investors constrained by predetermined but adjustable spending bounds. Our model considers the investors' utility as depending not only on actual consumption but also on both current and future lower bounds, which are defined as the minimum allowable consumption levels. Higher minimum levels assure investors that consumption will not fall below a certain threshold, thereby generating utility from this security. However, adjusting these minimum levels involves utility costs, leading to a significant trade-off. We derive optimal rules for the dynamic adjustment of these bounds, as well as for consumption and investment. Our model provides a comprehensive framework for formulating consumption and investment policies aimed at sustaining spending power. This is a joint work with Kexin Chen (The Hong Kong Polytechnic University) and Hyeng Keun Koo (Ajou University).

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