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3 - Determinants of Aggregate Spending and Saving

Published online by Cambridge University Press:  28 March 2024

Jeremy B. Rudd
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Summary

Empirical models of consumption, investment, and net exports are constructed and compared with predictions from theoretical models. The role of inventory investment in economic fluctuations is discussed. The empirical dependence of aggregate demand on aggregate output and income is computed, resulting in a rough estimate of a Keynesian (demand) multiplier.

Keywords

Consumptionfixed investmentcapital formationinventory investmentsavingdeterminants of aggregate demandself-organizing criticalitypermanent-income model
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A Practical Guide to Macroeconomics , pp. 46 - 78
Publisher: Cambridge University Press
Print publication year: 2024

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