TY  - BOOK
AU  - Campbell,John Y.
AU  - Sigalov,Roman
ED  - National Bureau of Economic Research.
TI  - Portfolio Choice with Sustainable Spending: A Model of Reaching for Yield 
T2  - NBER working paper series
PY  - 2020///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - April 2020; Hardcopy version available to institutional subscribers
N2  - We show that reaching for yield -- a tendency to take more risk when the real interest rate declines while the risk premium remains constant -- results from imposing a sustainable spending constraint on an otherwise standard infinitely lived investor with power utility. When the interest rate is initially low, reaching for yield intensifies. The sustainable spending constraint also affects the response of risktaking to a change in the risk premium, which can even change sign. In a variant of the model where the sustainable spending constraint is formulated in nominal terms, low inflation also encourages risktaking
UR  - https://www.nber.org/papers/w27025
UR  - http://dx.doi.org/10.3386/w27025
ER  -