consumption function


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consumption function

a statement of the general relationship between the dependent variable, CONSUMPTION EXPENDITURE, and the various independent variables that determine consumption, such as current DISPOSABLE INCOME and income from previous periods and WEALTH. See CONSUMPTION SCHEDULE, LIFE-CYCLE HYPOTHESIS, PERMANENT-INCOME HYPOTHESIS, WEALTH EFFECT.
References in periodicals archive ?
Our estimation results of the consumption function present evidence that the real rate of interest has no effect on consumption behavior in Pakistan.
Various estimates for the consumption function reveal that the short-run mix: out of disposable income (net of remittances) ranges between 0.
b) "The Decomposed Models of REH" which estimate the consumption function taking into account the entire set of variables such as taxes, subsidies, interest payments, public debt and wealth variable etc.
Given a positively sloped consumption function and a fixed investment value, one identifies equilibrium income, then the C + I line shifts up (due to an exogenous change in investment), and the new equilibrium income is located.
An important feature of Keynesian consumption function known as absolute income hypothesis (AIH) is that average propensity to consume decreases as income increases.
Uncertainty is another behavioral trend changing the consumption function.
Similarly, substituting equation 13 into equation 11 yields a consumption function that is also conditioned by the magnitude of MPC:
A consumption function is included as it is believed to contribute to upward movement of BP products in the value chain.
Yet he completely ignores the fact that Katona's main message is that the evidence (such as the 1957-58 downturn in the US) showed Galbraith was wrong about the power of advertising as a driver of overall consumption and that macroeconomic models were likely to predict poorly if, like Keynes's original consumption function analysis, they neglected the dependence of aggregate consumer spending on confidence as well as on the ability to spend.
Basic OLS Regression Results for Life-Cycle Consumption Function Current Results (1952-2005) Coefficient Estimate T-statistic Probability coeff.
It is widely believed that replacing this feature of models with a traditional consumption function linking consumer spending to current income will boost the output and consumption multipliers.
Indeed, chapter 4 proposes a consumption function of the form C = a + bW, while chapter 5 uses C = Y + bW, with Y now defined as income.