Substitution over Time in Work and Consumption
Posted: 6 Jul 2008
There are 2 versions of this paper
Substitution Over Time in Work and Consumption
Date Written: July 6, 2008
Abstract
Sir John Hick's Value and Capital provided the theoretical foundation for an important element of modern macroeconomics. Intertemporal substitution - deferral or acceleration of economic activity in response to the real interest rate and other incentives - is the mechanism generally relied upon in equilibrium theories of macroeconomics to explain the irregular evolution of the economy over time. Even theorists who question the pure market-clearing paradigm are concerned with intertemporal substitution in measuring deadweight burden of fluctuations. This paper surveys recent empirical evidence on intertemporal substitution with regard to the type of fluctuations model introduced in Value and Capital.
Suggested Citation: Suggested Citation