Partial adjustment and the permanent income hypothesis

Article Abstract:

A rational expectations model of the permanent income hypothesis as applied to changes in consumers' consumption due to changes in their permanent income was presented. Two theories of consumers' adjustment were postulated, the conventional, forward-looking quadratic cost theory, and another in which consumption adjustment becomes more rapid once changes in income become known. The two theories were applied to consumer consumption movements in the US and UK. It was concluded that the second theory was more reflective of consumer consumption adjustments.

Models, Rational expectations (Economics), Permanent income theory

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Comments: Unemployment, Consumption and Growth by Charles Bean and Chris Pissarides

Article Abstract:

A study was conducted to evaluate research on the conclusions of a simple overlapping generations model. The model assumes decreasing returns for firm technology and costly match-up problems between workersand jobs. It is shown that such a model should consider several factors which may affect implied policy and parameter variations. These factors include hiring cost reductions, worker bargaining power and the influence on growth of the marginal propensity to consume.

Unemployment

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Do protection, schooling, product per head and income distribution influence growth? A cross sectional analysis

Article Abstract:

The effects of trade protectionism, educational attainment and income distribution on the economic development of developing countries were analyzed. Income growth statistics from the World Bank from the periods 1970 to 1973, and from 1965 to 1973 were studied. It was concluded that equitable income distribution does not contradict economic growth and that free trade and higher levels of schooling will improve both income distribution and economic growth.

Economic aspects, International aspects, Developing countries, Income distribution, Free trade

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