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

Wu, Cheng (2016): New Result in Consumption Theory: Change in Savings and Income Growth – Nineteen Years Later.

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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.

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