Date of Defense

Spring 4-24-1991

Department

Economics

First Advisor

Phillip Caruso, Economics

Second Advisor

John Neill, Economics

Third Advisor

Mark Wheeler, Economics

Abstract

Examines the Permanent income hypothesis proposed by economist Milton Friedman, which states the choices made by consumers regarding their consumption patterns are determined not by current income but by their longer-term income expectations. This paper discusses consumption and investment, two major portions of aggregate demand, and statistically evaluates them. While the results were not conclusive, it was found that lagged consumption and lagged investment were statistically significant, providing more weight to Milton Friedman's theory.

Access Setting

Honors Thesis-Campus Only

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