More on Windfall Income and Consumption

  title={More on Windfall Income and Consumption},
  author={Tong Hun Lee},
  journal={Journal of Political Economy},
  pages={407 - 417}
  • Tong Hun Lee
  • Published 1975
  • Economics
  • Journal of Political Economy
The permanent-income hypothesis (PIH) of consumption postulates that the marginal propensity to consume (MPC) of transitory income is zero. It maintains that, since windfall receipts are largely transitory income, they tend to increase consumption only insofar as they increase the permanent or long-run expected income. This feature of the PIH has important implications. According to Friedman's original exposition, the zero MPC of transitory income "introduces important substantive content into… Expand
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Principles of econometrics
" Consumption , Savings , and Windfall Gains . "
  • A . E . R .
  • 1962
Consumption , Savings and Windfall Gains : Reply . " A
  • . E . R .
Consumption, Savings and Windfall Gains: Reply
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