Just like the poor HtM households, wealthy HtM households have a large marginal propensity to consume
out of small transitory income fluctuations.
This result confirms that consumption is proportional to income and net-wealth; that the average propensity to consume (APC) is decreasing in income (equation 12), but increasing in net-wealth, with the marginal propensity to consume
(MPC) being constant (equation 13):
The stages are estimated in such a way that one set of parameter estimates is produced, and these parameters can be used to estimate probability of purchase (using the cumulative density function, as with probit) and the marginal propensity to consume
(as with OLS).
t] are generated from changes in economic fundamentals, estimates of the marginal propensity to consume
out of wealth are of little use in this environment.
Lastly, we present estimates of the marginal propensity to consume
leisure (also known as the marginal propensity to earn out of wealth).
We begin by estimating the marginal propensity to consume
out of wealth with more modern econometric procedures.
2) In such a model, the coefficient on current income, A, becomes a combination of the marginal propensity to consume
out of current income for the forward-looking consumers and the proportion of consumers who are liquidity constrained.
The marginal propensity to consume
for cases above the limit is [Mathematical Expression Omitted], and [Delta]F(Z)/[Delta]X is the cumulative probability of being above the limit associated with total expenditures (for calculations of the terms and their derivatives see Maddala (1983, 149-160); McDonald and Moffitt (1980)).
It may be that Ibn Khaldun did not think that private saving amounted to much - he only talks of hoarding - and hence put private marginal propensity to consume
7) The marginal propensity to consume
leisure, C, is a less familiar concept but can be related to the income elasticity of labor supply by
It is shown that the marginal propensity to consume
out of anticipated labour income is positive if and only if the (intratemporal) elasticity of substitution between consumption and leisure at a given age is greater than the (intertemporal) elasticity of substitution between expenditure on consumption and leisure across two different ages.
Krugman argues that not enough economic integration has been achieved to change two facts: (1) Citizens of each nation have a much higher marginal propensity to consume
the goods they themselves produce than do citizens of other countries; and (2) the prices of each nation's labor and goods are sticky in domestic currency.