CITATION.cff

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abstract: >-
  In a risky world, a pessimist assumes the worst will happen. Someone who
  ignores risk altogether is an optimist. Consumption decisions are
  mathematically simple for both the pessimist and the optimist because both
  behave as if they live in a riskless world. A consumer who is a realist (that
  is, who wants to respond optimally to risk) faces a much more difficult
  problem, but (under standard conditions) will choose a level of spending
  somewhere between that of the pessimist and the optimist. We use this fact to
  redefine the space in which the realist searches for optimal consumption
  rules. The resulting solution accurately represents the numerical consumption
  rule over the entire interval of feasible wealth values with remarkably few
  computations.
title: The Method of Moderation
authors:
  - family-names: Carroll
    given-names: Christopher D.
    affiliation: Johns Hopkins University
    address: Baltimore, MD
    orcid: 0000-0003-3732-9312
    email: ccarroll@jhu.edu
  - family-names: Lujan
    given-names: Alan
    affiliation: Johns Hopkins University
    address: Baltimore, MD
    orcid: 0000-0002-5289-7054
    email: alujan@jhu.edu
  - family-names: Chipeniuk
    given-names: Karsten
    affiliation: Reserve Bank of New Zealand
  - family-names: Tokuoka
    given-names: Kiichi
    affiliation: Japanese Ministry of Finance
  - family-names: Wu
    given-names: Weifeng
    affiliation: Fannie Mae
    address: Washington, DC
contact:
  - family-names: Lujan
    given-names: Alan
    affiliation: Johns Hopkins University
    address: Baltimore, MD
    orcid: 0000-0002-5289-7054
    email: alujan@jhu.edu
keywords:
  - Dynamic Stochastic Optimization
  - Consumption-Saving Models
  - Numerical Methods
license: CC-BY-SA-3.0
license-url: https://creativecommons.org/licenses/by-sa/3.0/
repository: https://github.com/econ-ark/method-of-moderation