The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Mar, 1973, Volume 41, Issue 2
https://doi.org/0012-9682(197303)41:2<321:CCPDAT>2.0.CO;2-9
p. 321-335
Edward Zabel
The problem of the individual's consumption and portfolio choices over time has been the focus of recent studies by a number of authors. An attempt is made here to extend these results by examining the impact of transaction costs on optimal consumption and portfolio decisions. We are able to show that these costs considerably modify available results and greatly increase the difficulty of analyzing the consumer choice problem. The major reason is that now not only wealth, but also the composition of wealth, becomes important in the decision making process. To keep the exposition reasonably manageable we consider only a constant relative risk averse utility function and confine explicit attention to a two-period horizon. Since it is now necessary to examine portfolio choices in detail, we limit portfolio opportunities to a riskless asset, cash, and a risky asset, stock, with a random return. We assume proportional transaction cost for purchases or sales of stock. Wealth is taken to be the sum of cash and stock at the beginning of a period, while income is assumed to be zero, or included in initial wealth.
March 5, 2024
The terms of the Editors of the Econometric Society's three journals end June 30, 2025. We are pleased to announce the incoming Editors and to thank the outgoing Editors for their excellent and continuing service.
Econometrica: Since 2019, Guido Imbens has served as the 14th Editor of Econometrica. On July 1, 2025, Marina Halac will become the Editor.
Quantitative Economics: Stéphane Bonhomme has been the Editor of Quantitative Economics since 2021. His successor will be Bernard Salanié.
Theoretical Economics: The Editor of Theoretical Economics since 2021 has been Simon Board. Taking over for him in July 2025 will be Federico Echenique.
Guido, Stéphane, and Simon have been outstanding Editors. We are grateful to them for the work they have done and will continue to do, and we look forward to further congratulating them next year. We believe Marina, Bernard, and Federico will be outstanding successors and we thank them in advance for their service.
Finally, we are grateful to Larry Samuelson for chairing all three search committees, and we thank the search committee members for their hard and fruitful work:
Econometrica: Christian Dustmann, Lars Hansen, Alessandro Lizzeri, George Mailath, Ariel Pakes, Helene Rey, and Elie Tamer.
QE: Kate Ho, Michael Keane, Felix Kubler, Whitney Newey, and Frank Schorfheide.
TE: Jeff Ely, Johannes Horner, Gilat Levy, Meg Meyer, and Ran Spiegler.
