The textbook consumption function: a recent empirical irregularity, a comment.

From: American Economist | Date: March 22, 1998| Author: | Copyright information

In the Spring, 1988 issue of this journal, Edward Shapiro observed that estimates of the short run textbook Keynesian consumption function utilizing post-1973 data are radically different from those which were obtained using earlier sample periods. Instead of displaying the familiar positive intercept (reflecting positive autonomous consumption) and a marginal propensity to consume (mpc) between 0 and 1, estimates with sample periods utilizing post-1973 data exhibit large, negative intercept terms in the neighborhood of -225 and mpcs near unity. This departure from the traditional ...

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