This paper has two main goals. The first is to show that behavioral rather than maximizing principles emerge from textual analysis as the microeconomic foundations for Keynes’s Consumption Theory; the second goal is to demonstrate that it is possible to ground a Keynesian-type aggregate...

The outbreak of the financial crisis in 2008 witnessed a marked contraction in US consumption spending that had hitherto been boosted by historically high levels of household debt-financing. These events question the validity of conventional models of consumption based on the life-cycle...

We develop a Keynesian model of aggregate consumption. Our theory emphasizes the importance of the relative income hypothesis and debt-finance for understanding household consumption behavior. It is shown that particular importance attaches to how net debtor households service their debts, and...

Government deficits financed by domestic borrowing were found to crowd out private borrowing and spending by consumers and businesses, in both recession and non-recession periods. Deficits due to tax cuts had a net negative effect on GDP, because stimulus effects are smaller than the crowd out...

Within the confines of linear tax and complete market, we show that the efficiency force for a negative capital tax may not be strong enough to reverse the politico-economic force for a positive redistributive taxation under temptation and self-control preferences.

We exploit a quasi-experiment to provide new evidence on the magnitude of the housing wealth effect. We estimate an immediate shock of approximately -15% to house prices close to one of Stockholm's airports after its operations were unexpectedly continued as a result of political bargaining....

We exploit a quasi-experiment that occurred in Stockholm in 2007 to provide new evidence on the magnitude of the housing wealth e.ect. Stockholm's smaller city airport was expected to close in 2011 but its operating contract was unexpectedly renewed after political negotiation behind closed...

We exploit a quasi-experiment to provide new evidence on the magnitude of the housing wealth effect. We estimate an immediate shock of approximately -15% to house prices close to one of Stockholm's airports after its operations were unexpectedly continued as a result of political bargaining....

We discuss whether stock returns in Spain are predictable using a proxy for the logarithm of the consumption-aggregate wealth ratio, specifically the deviations of the common trend in consumption, labor income, and household asset holdings. The predictability regression used is based on...

In the heart of the Great Crisis, amidst great uncertainty and concerns surrounding the future of capitalism, John Maynard Keynes launched his optimistic prophecy that growth and technological change would allow mankind to solve its economic problem within a century. He envisioned a world where...