Chapter 8 Theory of Consumption Saving 友学经济学院
Chapter 8 Theory of Consumption & Saving 01 0 10 20 30 40 90 91 92 93 94 95 96 97 98 99 00
Topics to be Discussed o8.1 Keynesian consumption function o8. A simple two-period model o8.3 Consumption theory after Keynes Permanent-income Hypothesis Life-style Hypothesis o8.4 Real interest decision-making between consumption and saving 友学经济学院
Topics to be Discussed 8.1 Keynesian consumption function 8.2 A simple two-period model 8.3 Consumption theory after Keynes ❖ Permanent–income Hypothesis ❖ Life-style Hypothesis 8.4 Real interest & decision-making between consumption and saving
8.1 Keynesian Consumption Function household consumption is mainly decided by its disposable income Yd Consumption increases slower than income (0<b<1) C= a+by 友学经济学院
8.1 Keynesian Consumption Function ❖household consumption is mainly decided by its disposable income Yd;; ❖Consumption increases slower than income （0<b<1） C = a +bYd
8.1 Keynesian Consumption Function o Deficiency of Keynesian theory Only consider the influence of present income . Ignore the influence of household wealth to present consumption 友学经济学院
8.1 Keynesian Consumption Function Deficiency of Keynesian theory ❖ Only consider the influence of present income ❖ Ignore the influence of household wealth to present consumption
8.2 A Simple Two-period Model ⊙TWo- period model Consider present future Fix the foundation of permanent-income Hypothesis and Life-style Hypothesis 友学经济学院
8.2 A Simple Two-period Model Two-period model ❖ Consider present & future ❖ Fix the foundation of Permanent–income Hypothesis and Life-style Hypothesis