Tag: consumption and portfolio-choice model

A glass jar full of coins and plant growing through it with some coins and plant leaves.

Abstract This paper develops a consumption and portfolio-choice model of a retiree who allocates wealth among four assets: a riskless bond, a risky asset, a real annuity, and housing. Unlike previous studies that treat health expenditures as exogenous negative income shocks, this paper builds on the Grossman model to endogenize health expenditures as investments in…