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Studies from University of Coimbra Further Understanding of Economic Dynamics (Consuming durable goods when stock markets jump: A strategic asset...

July 4, 2014



Studies from University of Coimbra Further Understanding of Economic Dynamics (Consuming durable goods when stock markets jump: A strategic asset allocation approach)

By a News Reporter-Staff News Editor at Economics Week -- Current study results on Economic Dynamics have been published. According to news reporting originating in Coimbra, Portugal, by VerticalNews journalists, research stated, "In this paper we show the impact of considering jumps in the return process of risky assets when deciding how to invest and consume throughout time. Agents derive their utilities from consumption over time."

The news reporters obtained a quote from the research from the University of Coimbra, "We consider an agent that invests in the financial market and in durable and perishable consumption goods. Assuming that there are costs for transacting the durable good, we show that an agent who does not consider the possibility of jumps will make suboptimal decisions, not only regarding the fraction of wealth invested in the stock market, but also with respect to the timing for trading on the durable good."

According to the news reporters, the research concluded: "Furthermore we also show that jumps cause a non-obvious asymmetric impact on the thresholds that lead the consumer to trade the durable good, even when the jump distribution is symmetric."

For more information on this research see: Consuming durable goods when stock markets jump: A strategic asset allocation approach. Journal of Economic Dynamics & Control, 2014;42():86-104. Journal of Economic Dynamics & Control can be contacted at: Elsevier Science Bv, PO Box 211, 1000 Ae Amsterdam, Netherlands. (Elsevier - www.elsevier.com; Journal of Economic Dynamics & Control - www.elsevier.com/wps/product/cws_home/505547)

Our news correspondents report that additional information may be obtained by contacting J.A. de Matos, University of Coimbra, Fac Econ, P-3004512 Coimbra, Portugal.

Keywords for this news article include: Europe, Coimbra, Portugal, Economic Dynamics

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC


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Source: Economics Week


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