intertemporal consumption

It causes difficulties for models based on intertemporal consumption.

Behavioural economists have proposed an alternate description of intertemporal consumption, the behavioural life cycle hypothesis.

Economic theories of intertemporal consumption seek to explain people's preferences in relation to consumption and saving over the course of their life.

Expected utility and discounted utility models began to gain acceptance, generating testable hypotheses about decision making given uncertainty and intertemporal consumption respectively.

He also discovered the patterns in savings-income behavior which launched the Intertemporal consumption of Franco Modigliani and Milton Friedman.

These assumptions provide a tight link between attitudes to risk and attitudes to variations in intertemporal consumption which is crucial in deriving the equity premium puzzle.

Chamley writes that before reaching the golden rule steady state capital income taxes are efficient in the sense that they do not promote deadweight loss through intertemporal consumption substitution.

However, technology-based theories of real business cycles also imply that consumers will change their intertemporal consumption and savings decisions based on the real interest rate available to them, which is a shift in demand.

One attempt uses an standard model of open economy intertemporal consumption to show that it is possible to replicate a tariff on imports or a subsidy on exports by closing the current account and accumulating reserves.

Intertemporal consumption: Nominal gains in stock market portfolios and other assets tend to have smaller effects on immediate consumption than predicted by the lifetime-income hypothesis (of rational consumption averaging based on NPV income expectations).

Cumulative prospect theory has been applied to a diverse range of situations which appear inconsistent with standard economic rationality, in particular the equity premium puzzle, the asset allocation puzzle, the status quo bias, various gambling and betting puzzles, intertemporal consumption and the endowment effect.