The Economics Book

IN CONTEXT

FOCUS

Decision making

KEY THINKER

Franco Modigliani (1918–2003)

BEFORE

1936 John Maynard Keynes publishes The General Theory of Employment, Interest and Money, proposing a simple mathematical function to describe consumption.

1938 Keynesian economist Alvin Hansen predicts long-term stagnation in the US economy.

AFTER

1978 US economist Robert Hall estimates a function to describe US consumption, potentially confirming a version of Friedman’s theory.

1982 US economists Robert Hall and Frederick Mishkin propose that households follow a “rule of thumb” when planning their consumption.

In 1936, John Maynard Keynes’s The General Theory of Employment, ...