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On (Ultra) rationality and the corporate and government veils

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  • Yannis A. Monogios
  • Christos Pitelis

Abstract

The idea of (ultra) rationality in the context of changes in corporate and/or government savings stimulating offsetting responses in household savings has been the subject of theoretical and empirical controversy. This paper provides fresh evidence of the (ultra) rationality hypothesis, in the context of a generalized version of the life‐cycle hypothesis of saving, for the case of the UK. The results suggest partial personal savings adjustment to government and corporate saving changes in the short and (to a lesser extent) the long run. This has important implications on the issues of ‘rationality’, ‘fiscal policy’ and financial capital accumulation.

Suggested Citation

  • Yannis A. Monogios & Christos Pitelis, 2004. "On (Ultra) rationality and the corporate and government veils," Manchester School, University of Manchester, vol. 72(3), pages 382-402, June.
    • Handle: RePEc:bla:manchs:v:72:y:2004:i:3:p:382-402
    DOI: 10.1111/j.1467-9957.2004.00398.x
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