The paper shows how aggregate AS-AD can be derived within the standard neoclassical dynamic setting known as the Ramsey-Cass- Koopmans (RCK) model. AS-AD is the stationary equilibrium of the deterministic dynamic general equilibrium framework. The derivation builds a permanent income type...

We extend upon Reeves (2020), who attempts to demonstrate that classical violations of the Law of Demand are in actuality the result of a violation of the ‘ceteris paribus’ assumption. For example, price changes in Giffen goods create a chain reaction from the Giffen good through a...

Diminishing marginal utility is neither necessary nor sufficient for downward sloping demand, and it is not necessary for convex indifference curves. We illustrate these facts with two simple counter examples, using valid and easy to understand utility functions. The examples are accompanied...

Purpose The purpose of this paper is to contribute to the teaching of undergraduate macroeconomics. Design/methodology/approach To suggest a roadmap, based on a consumption function, to be used by instructors willing to teach the Lucas Critique subject. Findings Therefore, this paper proposes a...

We adopt the collective approach to consumer behavior with egoistic agents, and assume that the household consumption is either private or public. We then show that (i) household demands have to satisfy testable constraints and (ii) some elements of the decision process can be retrieved from...

It is unlikely that husbands and wives always agree on exactly what public goods to buy. Nor do they necessarily agree on how many hours to work with obvious consequences for the household budget. We therefore model consumption and labor supply behavior of a couple in a non-cooperative setting...

This paper extends standard consumer theory to account for endogenous moral motivation. Building on cognitive dissonance theory, I show how moral values are affected by changes in prices and income. The key insight is that changes in prices and income that lead to higher consumption of an...

We consider the problem of optimal consumption for an investor who is risk and uncertainty avers. We model these preferences of the investor with the help of a convex risk-measure. Apart from consumption the agent has the possibility to invest initial capital and random endowment in a market...