016Government Debt and Budget Deficits.ppt

Chapter16 Consumption
John Maynard Keynes and the consumption function
Irving Fisher and inter-temporal choice
Franco Modigliani and the life-cycle hypothesis
Milton Friedman and the permanent-e hypothesis
Conclusion
John Maynard Keynes and the Consumption
Keynes’s conjectures
MPC, APC, C = C’+ c Y
The early empirical esses
Secular stagnation, Simon s, and the consumption puzzle
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Irving Fisher and Inter-temporal Choice
The inter-temporal budget constraint
Consumer preferences
Optimization
How changes in e affect consumption
How changes in the real interest rate affect consumption
Constraints on borrowing
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Mankiw:Macroeconomics, 4/e © by Worth Publishers, Inc.