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

Cheng K. WU

Abstract


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.

Keywords. Consumption; Martingale; Savings; Growth; Income.

JEL. E12, E21, J30, F41, B00.

Keywords


Consumption; Martingale; Savings; Growth; Income.

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References


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DOI: http://dx.doi.org/10.1453/jel.v3i1.684

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