The Iso-Elastic (CRRA) Utility Function

[@konstantinvinogradov5886]

Mr Prettener, fantastic video! Your explanations are very clear and intuitive and helped me to build an intuition for this topic, appreciate your work

[@KlausPrettner]

Thank you very much for your positive feedback. I am happy that the video was helpful.

[@mikkelstergaard423]

Hey Mr. Prettner. First of all: Great videos! Thank you for your work. I am wondering why the CRRA utility function becomes negative when theta is between 0 and 1 for small consumption bundles? Since u = c_t is positive for c_t >=0?

[@KlausPrettner]

Thank you very much for the positive feedback! That the CRRA function implies a negative utility level for low consumption can be best seen when we distinguish between three cases: 1) theta1: In this case the denominator is negative. However, c^(1-theta) is above 1 so that the numerator is always positive. Thus, again, the utility level itself will be negative. 3) theta = 1: In this case, u(c)=log(c), which is always negative if c

[@badrelhamzaoui3560]

Mr prettner, i m really interested in your work and videos, i m a second year PhD candidate in applied macro, and i m interested in HANK models, do you have any ideas about this typeof models ? Thanks a lot, and thank s a lot for the videos

[@KlausPrettner]

Thank you very much! I am not working on HANK models but I think a good source would be the work of Benjamin Moll. For example, you can find one of his lectures on HANK here: benjaminmoll.com/wp-content/uploads/2019/07/Lecture9_2149.pdf where he also provides references to important papers in this area. I hope this will be useful.

[@manavtyagi6521]

Sir, Can you please make a video on Harrod-Domar Model especially the exponential (e^x) investment path in the model.

[@KlausPrettner]

Thank you for the suggestion. I will try to do this in the future.