Question about the risk aversion parameter for household


#1

Hello everyone,
In one of my estimation using bayesian techniques, I obtained a risk aversion parameter lower than one. (Sigma_C in the screenshot)

My question is about its interpretation. Does it implies an other interpretation than the classic result of sigma_C > 1 ?
Thanks in advance.
PS : my model is in the vain of Iacoviello (2015) without the housing market.


#2

The restriction for risk-aversion is \sigma>0. As long as that is satisfied, you should be fine.


#3

Great !
Thanks a lot for your answer.