The Life Cycle Hypothesis

Michael Szenberg and Lall Ramrattan
Additional contact information
Michael Szenberg: Pace University
Lall Ramrattan: University of California

Chapter 4 in Franco Modigliani, 2008, pp 79-106 from Palgrave Macmillan

Abstract: Abstract Keynes’ consumption function, the absolute income hypothesis, revolutionized economics by shifting macroeconomic analysis from the supply side to the demand side. Total demand includes four major components relating to the household, business, government, and foreign sectors — the areas that have attracted varying degrees of scientific research since the post-WWII period. Modigliani’s life cycle hypothesis (LCH) contribution to macroeconomics fits in the domain of household consumption, the only component for which Keynes had advanced a psychological law that “men are disposed, as a rule and on the average to increase their consumption as their income increases, but not by as much as the increase in their income.”1

Keywords: Liquidity Constraint; Current Income; Consumption Function; Permanent Income; Income Ratio (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:gtechp:978-0-230-58243-9_4

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230582439

DOI: 10.1057/9780230582439_4

Access Statistics for this chapter

More chapters in Great Thinkers in Economics from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().