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Clower’s Dual-Decision Hypothesis is economics

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  • Wu, Cheng

Abstract

Though Wu (2017) has shown Clower’s Dual Decision Hypothesis leading to Keynes’ change in saving (and disequilibrium) conclusion, it is important to compare Clower’s budget constraint approach with other models, including those found in Hall’s consumption theorem and similar approach. In Clower, by assuming that, consumers may not satisfy the budget constraint, one cannot automatically assume Hall’s consumption theorem to hold. And, by showing how households need to optimize contingent on the satisfaction of their budget constraint, Clower was, in effect, creating a feedback mechanism.

Suggested Citation

  • Wu, Cheng, 2018. "Clower’s Dual-Decision Hypothesis is economics," MPRA Paper 84013, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:84013
    as

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    File URL: https://mpra.ub.uni-muenchen.de/84013/1/MPRA_paper_84013.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. 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.
    3. 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.
    4. 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.
    5. Cheng K. WU, 2016. "New Result in Consumption Theory:Change in Savings and Income Growth – Nineteen Years Later," Journal of Economics Library, KSP Journals, vol. 3(1), pages 77-81, March.
    6. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    7. 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.
    8. 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.
    9. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Keynes; Clower; Keynesian; disequilibrium; Dual Decision Hypothesis; consumption; martingale; saving; growth; income; trade; feedback;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • C0 - Mathematical and Quantitative Methods - - General
    • D1 - Microeconomics - - Household Behavior
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • N0 - Economic History - - General
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • P0 - Political Economy and Comparative Economic Systems - - General

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