宏观经济学 教案 Chapter14.docxVIP

CHAPTER 14CONSUMPTION AND SAVING Chapter Outline The marginal propensity to consume The life-cycle theory The permanent-income theory The random-walk model of consumption Demography and consumption Liquidity constraints and myopia Buffer stock saving Excess smoothness and excess sensitivity Interest rates and consumption: the Fisher diagram The Barro-Ricardo equivalence proposition International differences in savings ratesChanges from the Previous Edition The theoretical part of this chapter remains basically intact but the material has been updated, especially Figures 14-1, 14-2, 14-3 and 14-5, and Table 14-2. In Section 14-2 a few paragraphs have been added on how to measure liquidity constraints. Introduction to the MaterialAn understanding of consumption behavior is important for many reasons, but particularly because consumption is a larger component of aggregate demand than all of the other three components combined, accounting for roughly 70 percent of GDP. The ratio of consumption to income is relatively stable, but variations do occur and need to be explained. Furthermore, any part of disposable income that is not used for consumption is saved and can therefore contribute to the accumulation of capital. The U.S. national savings rate is considered fairly low by international standards. This can be attributed to demographic factors, differences in attitude toward saving among populations, and the fact that the U.S. tax system encourages borrowing over saving. But it is important to note that there is some controversy regarding how saving is measured. Previous chapters of the text used the Keynesian consumption function,C = C0 + cYD, which assumed that the level of consumption is determined solely by the level of disposable income. This simple relationship provided a reasonable explanation of consumption behavior for the material covered earlier in the text; however, it does not give an accurate picture of the consumption or savings decisions of households.