Beschreibung:
This paper studies the concavity of the consumption function of a habit-forming consumer with convex absolute risk tolerance. I show that the consumer's consumption function can be convex when young and becomes concave when old, contrary to the results of a standard consumptionsaving model with time-separable utility. Compared with a model without habit formation, the conditions required for consumption functions to be concave are weaker in general. These results advance our understanding of the (non-)concavity of consumption function without timeseparable preferences