Portfolio Selection with Subsistence Consumption Constraints and CARA Utility

Figure 1

This figure is the optimal consumption rate 𝑐^∗_𝑡 when 𝛽=0.05,𝑟=0.01,𝜇=0.07,𝜎=0.2, 𝑅=0.02, and 𝛾=3. Solid line gives the optimal consumption rate with a subsistence consumption constraint and dotted line gives the optimal consumption rate without the constraint.