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Macro midterm spring

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Hypothesized that a fraction (lambda) of consumer's spend their current income and the remaining consumers behave according to Hall's Theory. Measured consumption as nondurable and services per person. --> results that consumption appears to increase by about fifty cents in response to an anticipated on dollar increase in income, and the null hypothesis of no effect is strongly rejected. Lambda,however, is far below 1, suggesting that PIH is important to understanding consumption.

Author: Daniel Ortega


PIH/RWH - Campbell and Mankiw

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