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A structure of the consumption function

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  • Hsiang-Ke Chao

Abstract

It is claimed in the structural realism in philosophy of science that scientists aim to preserve the true structure, represented by the equations in their models. We reinterpret structural realism as a doctrine involving representation. Proving the existence of a representation theorem secures the problem of lacking independent criteria for identification between structure and non-structure. This paper argues that a similar realist view of structure can be found in the theory of consumption in which the Fisherian framework of intertemporal choices is regarded as the true structure of the consumption function. Unlike the passive strategy of inducing the structure contained in structural realism, economists define structure in terms of invariance under intervention. Such a definition serves as a crucial device to examine and develop models for the adequacy of representing the structure of the consumption functions. JEL Classification: B22, B41, C50, E21

Suggested Citation

  • Hsiang-Ke Chao, 2007. "A structure of the consumption function," Journal of Economic Methodology, Taylor & Francis Journals, vol. 14(2), pages 227-248.
    • Handle: RePEc:taf:jecmet:v:14:y:2007:i:2:p:227-248
    DOI: 10.1080/13501780701394102
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    References listed on IDEAS

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    1. Simon Kuznets, 1946. "Introduction, National Income: A Summary of Findings," NBER Chapters, in: National Income: A Summary of Findings, pages 1-2, National Bureau of Economic Research, Inc.
    2. Hendry,David F. & Morgan,Mary S., 1997. "The Foundations of Econometric Analysis," Cambridge Books, Cambridge University Press, number 9780521588706.
    3. Granger,Clive W. J., 1999. "Empirical Modeling in Economics," Cambridge Books, Cambridge University Press, number 9780521778251.
    4. Angus Deaton, 2005. "Franco Modigliani and the life-cycle theory of consumption," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 91-107.
    5. Simon Kuznets, 1946. "National Income: A Summary of Findings," NBER Books, National Bureau of Economic Research, Inc, number kuzn46-2.
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    Cited by:

    1. Ebadi Esmaeil & Are Wasiu, 2023. "Reinvestigating the U.S. Consumption Function: A Nonlinear Autoregressive Distributed Lags Approach," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 17(1), pages 1-22, January.

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    More about this item

    Keywords

    consumption function; Euler-equation approach; invariance; representation; structure; structural realism;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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