Question

In the discussion of the life-cycle hypothesis in the text, income is assumed to be constant during the period before retirement. For most people, however, income grows over t does this growth in income infuence the lifetime pattern of consumption and wealth accumulation shown in the figure in the slide 39 of "Ch17" under the following conditions? heir lifetimes. How 1. Consumers can borrow, so their wealth can be negative. 2. Consumers face borrowing constraints that prevent their wealth from falling below zero.

Answer 1