The Consumption Function as a Tool for Prediction
E VER since the General Theory, continued experimentation with various sets of independent variables has produced numerous consumption functions. The bulk of this work was completed during or immediately following World War II, and therefore little of it has been tested with respect to the postwar period. Some may object to the use of the postwar years for testing purposes, on the grounds that the economic system had not returned to normal conditions, especially in the sphere of consumers' expenditures, owing to the existence of the deferred demand which had grown to immense proportions as the result of five years of war production. But, as we are now engaged in a staggering rearmament program coupled with a foreign war, these immediate postwar years of I946-50 appear as close an approach to the normal period as may legitimately be expected in the near future. Thus, it seems opportune to take stock of some of the existing contributions to see if we may find a consumption function suitable for use as a tool for prediction. The functions which we shall endeavor to test for the postwar period fall into three groups.
- DOI
- 10.2307/1925635
- Volume
- 34 (3)
- Pages
- 270
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