Or perhaps more sophisticated methods are applied along the lines suggested by Friedman's permanent income hypothesis.

There is a corollary to the permanent income hypothesis named the permanent production hypothesis.

Both forms of the permanent income hypothesis challenged the Keynesian view that short-term stabilization policies like tax cuts can stimulate the economy.

Changing measured income and its relation to consumption over time might be modeled accordingly, such as in the permanent income hypothesis.

I was talking about the permanent income hypothesis; Lucas was talking about rational expectations.

See Permanent income hypothesis.

Independence of Consumption and current Income (life-cycle permanent income hypothesis)

In Friedman's permanent income hypothesis model, the key determinant of consumption is an individual's real wealth, not his current real disposable income.

Friedman was also known for his work on the consumption function, the permanent income hypothesis (1957), which Friedman himself referred to as his best scientific work.

It includes Friedman's permanent income hypothesis on consumption and "rational expectations" theory, lead by Robert Lucas, and real business cycle theory.

More extensive research has been conducted in this area, and concrete evidence confirmed that the presence of precautionary motive for savings building within the permanent income hypothesis framework.

The permanent income hypothesis (PIH) is a theory of consumption that was developed by the American economist Milton Friedman.

Criticism of this assumption lead to the development of Milton Friedman's permanent income hypothesis and Franco Modigliani's life cycle hypothesis.

This principle, which is known in economics as the permanent income hypothesis, may explain why the 2001 tax rebates don't seem to have stimulated spending as much as boosters had hoped.

The study concludes that the rebate payments for U.S. households were an effective stimulus method by increasing disposable income despite the predictions of certain economic theories such as the permanent income hypothesis.

This paved the way for Milton Friedman's Permanent Income Hypothesis, and several more modern alternatives such as the Life cycle hypothesis and the Relative Income Hypothesis.

Prior to this time, influenced by Milton Friedman's permanent income hypothesis under adaptive expectations, economists had expected past income to affect current consumption by altering individuals' expectations about their permanent income.

The permanent income hypothesis suggests that consumers take debt to smooth consumption throughout their lives, borrowing to finance expenditures (particularly housing and schooling) earlier in their lives and paying down debt during higher-earning periods.

In the permanent income hypothesis, Friedman makes a series of assumptions regarding the statistical relationships that exist between permanent and transitory consumption, permanent and transitory income and transitory income and consumption.

This work resulted in their jointly authored publication Incomes from Independent Professional Practice, which introduced the concepts of permanent and transitory income, a major component of the Permanent Income Hypothesis that Friedman worked out in greater detail in the 1950s.

For example, Milton Friedman's microeconomic theory of consumption over time (the 'permanent income hypothesis') suggested that the marginal propensity to consume out of temporary income, which is crucial for the Keynesian multiplier, was likely to be much smaller than Keynesians assumed.

Foremost among them was Milton Friedman's permanent-income hypothesis, which still dominates research on spending.

The permanent-income hypothesis is elegant, but studies have shown that it's not always an accurate description of the way people decide how to spend and save.