marginal propensity to consume.

Estimation of Consumption Functions Using Savings Motive Hypothesis (SMH)

In this paper a new consumption function is derived based on savings motive hypothesis (SMH). The major theory behind the SMH is that households save part of their income in period 1 and transfer it to period 2. Implying that consumption in period 1 is the addition of autonomous consumption and variable consumption in period 2. The validity of the SMH is tested by using data from India, Kenya, South...