Consumption-Saving Investigation: United States

This paper uses historical data from the United States to investigate the simple Keynesian consumption-income relationship. When structural breaks are taken into account, the theory of the simple Keynesian consumption function performs quite well in describing what is seen in the US data. Students and instructors of macroeconomic theory should be interested in these results, which demonstrate that the simple Keynesian consumption function does indeed perform quite well as a first approximation of the consumption-income relationship.