Chapter 8 A Two-Period Model: The Consumption- Savings Decision and Ricardian Equivalence.

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Chapter 8 A Two-Period Model: The Consumption- Savings Decision and Ricardian Equivalence

Copyright © 2005 Pearson Addison-Wesley. All rights reserved. 8-2 Figure 8.1 Consumer's Lifetime Budget Constraint

Copyright © 2005 Pearson Addison-Wesley. All rights reserved. 8-3 Figure 8.2 A Consumer's Indifference Curves

Copyright © 2005 Pearson Addison-Wesley. All rights reserved. 8-4 Table 8.1 Sara’s Desire for Consumption Smoothing

Copyright © 2005 Pearson Addison-Wesley. All rights reserved. 8-5 Figure 8.3 A Consumer Who Is a Lender

Copyright © 2005 Pearson Addison-Wesley. All rights reserved. 8-6 Figure 8.4 A Consumer Who Is a Borrower

Copyright © 2005 Pearson Addison-Wesley. All rights reserved. 8-7 Figure 8.5 The Effects of an Increase in Current Income for a Lender

Copyright © 2005 Pearson Addison-Wesley. All rights reserved. 8-8 Figure 8.6 Percentage Deviations from Trend in GDP and Consumption, 1947– 2003

Copyright © 2005 Pearson Addison-Wesley. All rights reserved. 8-9 Figure 8.7 An Increase in Future Income

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.8 Temporary Versus Permanent Increases in Income

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.9 Stock Prices and Consumption of Nondurables and Services, 1985–2003

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.10 Scatter Plot of Percentage Deviations from Trend in Consumption of Nondurables and Services Versus Percentage Deviations from Trend in a Stock Price Index

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.11 An Increase in the Real Interest Rate

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.12 An Increase in the Real Interest Rate for a Lender

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.13 An Increase in the Real Interest Rate for a Borrower

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.14 Example with Perfect Complements Preferences

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.15 A Consumer's Demand for Current Consumption Goods, c d, as a Function of Current Income

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.16 A Shift in a Consumer's Demand for Current Consumption

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.17 Ricardian Equivalence with a Cut in Current Taxes for a Borrower

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.18 Pay-As-You-Go Social Security for Consumers Who Are Old in Period T

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.19 Pay-As-You-Go Social Security for Consumers Born in Period T and Later

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.20 Fully Funded Social Security When Mandated Retirement Saving Is Binding

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.21 A Consumer Facing Different Lending and Borrowing Rates

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.22 Effects of a Tax Cut for a Consumer with Different Borrowing and Lending Rates

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.23 Real Consumption of Durables, 1991–1993

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.24 Real Consumption of Nondurables, 1991–1993

Copyright © 2005 Pearson Addison-Wesley. All rights reserved Figure 8.25 Real Consumption of Services, 1991–1993