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Corporate Retentions and Consumers’ Expenditure

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  • Michael Sumner

Abstract

Corporate retained profits have well‐determined effects on both total and non‐durable consumers’ expenditure, with coefficients which do not differ significantly from those on disposable income in a standard consumption function; the effects also appear in a life‐cycle model which excludes disposable income. Retentions convey no useful information about future values of the other arguments of either consumption function. The implications of an alternative explanatory hypothesis, of a discrepancy between the principles and practice of national accounting, are not rejected.

Suggested Citation

  • Michael Sumner, 2004. "Corporate Retentions and Consumers’ Expenditure," Manchester School, University of Manchester, vol. 72(1), pages 119-130, January.
    • Handle: RePEc:bla:manchs:v:72:y:2004:i:1:p:119-130
    DOI: 10.1111/j.1467-9957.2004.00383.x
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    Cited by:

    1. Jan Behringer & Till van Treeck, 2023. "The corporate sector and the current account," Oxford Economic Papers, Oxford University Press, vol. 75(3), pages 826-857.
    2. Jan Behringer & Till van Treeck, 2013. "Income distribution and current account: A sectoral perspective," IMK Working Paper 125-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Christian A Belabed & Thomas Theobald & Till van Treeck, 2018. "Income distribution and current account imbalances [Notes on capacity utilisation, distribution and accumulation]," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(1), pages 47-94.
    4. Theobald, Thomas & Grüning, Patrick & van Treeck, Till, 2015. "Income inequality and Germany's current account surplus," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112846, Verein für Socialpolitik / German Economic Association.
    5. Bill Martin, 2009. "An Augmented UK Private Expenditure Function," Working Papers wp384, Centre for Business Research, University of Cambridge.

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