This paper analyzes aggregate wealth based on separable
risk aversion and intertemporal substitution. In an infinite-period
overlapping-generations model with survival
uncertainty, economic growth, and permanent and temporary income shocks, our
closed-form solution permits us to derive rich behavioral conclusions and to
assess the relative importance of the major components of aggregate wealth.
In particular, the separation of the attitudes toward risk and substitution
allows us to disentangle behaviors relating to the intertemporal
substitution motive from behaviors relating to the
precautionary motive.