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New Result in Consumption Theory: Change in Savings and Income Growth – Nineteen Years Later

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  • Wu, Cheng

Abstract

This new version uses the definitions and some of the results found in Sargent’s Macroeconomic Theory. Hall’s (1978) proof of the corollary 4, ct+1 = ct, can be found in Flavin (1981). Writing the same consumption stated in Flavin, for period t+1, in a different way for the summation of the expected future incomes, it is possible to show that changes in savings is a function of income growth. This new result has implications, for instance, in Keynes’ (1936) saving and dissaving.

Suggested Citation

  • Wu, Cheng, 2016. "New Result in Consumption Theory: Change in Savings and Income Growth – Nineteen Years Later," MPRA Paper 69582, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69582
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    File URL: https://mpra.ub.uni-muenchen.de/69582/1/MPRA_paper_69582.pdf
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    References listed on IDEAS

    as
    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    2. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    3. Flavin, Marjorie A, 1981. "The Adjustment of Consumption to Changing Expectations about Future Income," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 974-1009, October.
    4. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Wu, Cheng, 2016. "Economics and How Obama Could Have Lost the 2016 Election Too," MPRA Paper 75107, University Library of Munich, Germany.
    2. Wu, Cheng, 2017. "Does Clower’s Dual-Decision Hypothesis lead to the change in saving conclusion in Keynes’s General Theory?," MPRA Paper 82120, University Library of Munich, Germany.
    3. Wu, Cheng, 2018. "Clower’s Dual-Decision Hypothesis is economics," MPRA Paper 84013, University Library of Munich, Germany.
    4. Cheng K. WU, 2017. "Does Clower’s Dual-Decision Hypothesis lead to the change in saving conclusion in Keynes’s General Theory?," Journal of Economics Library, KSP Journals, vol. 4(4), pages 552-560, December.
    5. Cheng K. WU, 2017. "Economics and how Obama could have lost the 2016 election too," Journal of Social and Administrative Sciences, KSP Journals, vol. 4(3), pages 283-288, September.
    6. Cheng K. WU, 2018. "Clower’s Dual-Decision Hypothesis is economics," Turkish Economic Review, KSP Journals, vol. 5(1), pages 83-88, March.

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    More about this item

    Keywords

    consumption; martingale; savings; growth; income;
    All these keywords.

    JEL classification:

    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F0 - International Economics - - General
    • F00 - International Economics - - General - - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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