We explore the limitations of the CRRA utility speci cation as applied
to cake-eating problems. We construct a set of conditions under which cake-
eating problems have no optimal solution. Furthermore, we explore how agents
choose their consumption path when an optimization problem has no solution,
and suggest a method...
During the 1970’s the United States experienced several periods of high inflation that have been at least partially attributed to positive oil price shocks. The effectiveness of the Organization of Petroleum Exporting Countries at controlling the price of oil has varied over time, as well as the responsiveness of U.S....