The Simplest Possible Presentation of the Life Cycle-Permanent Income Hypothesis and Ricardian Equivalence
9 Pages Posted: 12 Sep 2011
Date Written: September 1, 2011
In this paper, a set of simple numerical examples are used to illustrate the essence of the life cycle-permanent income hypothesis and Ricardian equivalence. The level of mathematical sophistication required of the reader is nothing more than grade school arithmetic. Since the simple Keynesian absolute income theory of consumption requires nothing more than elementary school mathematical competence, the playing field of the various theories is leveled for the novice reader.
JEL Classification: A2, E20, E21
Suggested Citation: Suggested Citation