A useful reference

A useful reference

A useful reference

Good Reference on Economic Theory Relevant to Survey of Consumer Finance

If you need a recent and slightly advanced reference
on economic theory relevant to SCF research, consider
David Romer’s Advanced Macroeconomics (McGraw-Hill, 1996.)
($43.35 at OSU Bookstore for an economics course.)

It may seem strange to use a MACRO text as a reference
for research about household behavior, but macroeconomics
provides much more background than microeconomics.
Macroeconomics, especially growth theory, is concerned with
optimal savings and investment policy.

Romer’s topics include:
“A Model of Human Capital and Growth”

“Consumption under Certainty: The Life-Cycle/Permanent Income Hypothesis”

“Consumption under Uncertainty: The Random-Walk Hypothesis”

“The Interest Rate and Savings”

“Consumption and Risky Assets”

Among other things, he provides a derivation of
C2/C1 = ((1+r)/(1+rho))^(1/x)
(with slightly different symbols)
which is the basis for the life cycle savings program.


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