Sustainability in a risky world
Campbell, J. & Martin, I.
(2021).
Sustainability in a risky world.
(Financial Markets Group Discussion Papers 830).
Financial Markets Group, The London School of Economics and Political Science.
(2021).
Sustainability in a risky world.
(Financial Markets Group Discussion Papers 830).
Financial Markets Group, The London School of Economics and Political Science.
This paper studies the restrictions on consumption, portfolio choice, and social discounting implied by a sustainability constraint, that utility should not be expected to decline over time, in an economy with risky investment opportunities. The sustainability constraint does not distort portfolio choice and implies a consumption-wealth ratio and social discount rate that can be considerably higher than the riskless interest rate.