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Convexity is an important topic in economics. In the Arrow–Debreu model of general economic equilibrium, agents have convex budget sets and convex preferences: At equilibrium prices, the budget hyperplane supports the best attainable indifference curve. The profit function is the convex conjugate of the cost function.
Jan 1, 2017 · Received: 13 January 2017. Accepted: 13 January 2017. Published: 29 March 2017. Publisher Name: Palgrave Macmillan, London. Online ISBN: 978-1-349-95121-5. eBook Packages: Springer Reference Economics and Finance Reference Module Humanities and Social Sciences Reference Module Business, Economics and Social Sciences
- Lawrence E. Blume
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In mathematical finance, convexity refers to non-linearities in a financial model. In other words, if the price of an underlying variable changes, the price of an output does not change linearly, but depends on the second derivative (or, loosely speaking, higher-order terms) of the modeling function. Geometrically, the model is no longer flat ...
10.2 Borrowing: Bringing consumption forward in time. 10.3 Impatience and the diminishing marginal returns to consumption. 10.4 Borrowing allows smoothing by bringing consumption to the present. 10.5 Lending and storing: Smoothing and moving consumption to the future.
Non-convexity (economics) is included in the JEL classification codes as JEL: C65. In economics, non-convexity refers to violations of the convexity assumptions of elementary economics. Basic economics textbooks concentrate on consumers with convex preferences (that do not prefer extremes to in-between values) and convex budget sets and on ...
We explore from a theoretical and an empirical perspective the value of convexity in the US Treasury market. We present a quasi-model-agnostic approach that is rooted in the existence of some affine model capable of recovering with good accuracy the market yield curve and covariance matrix.
Abstract. Generalized convexity and generalized concavity play an increasingly important role in economics. This is shown by several examples from production and utility theory, from the theory of measurement in economics and from the theory of aggregation. Download to read the full chapter text.
