Corporate Retentions and Consumers' Expenditure

12 Pages Posted: 23 Mar 2004

See all articles by Michael Sumner

Michael Sumner

University of Sussex - Department of Economics

Abstract

Corporate retained profits have well-determined effects on both total and non-durable consumers' expenditure, with coefficients which do not differ significantly from those on disposable income in a standard consumption function; the effects also appear in a life-cycle model which excludes disposable income. Retentions convey no useful information about future values of the other arguments of either consumption function. The implications of an alternative explanatory hypothesis, of a discrepancy between the principles and practice of national accounting, are not rejected.

Suggested Citation

Sumner, Michael, Corporate Retentions and Consumers' Expenditure. Available at SSRN: https://ssrn.com/abstract=513762

Michael Sumner (Contact Author)

University of Sussex - Department of Economics ( email )

School of Social Sciences & Cultural Studies
Falmer, Brighton, BN1 9QN
United Kingdom

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