The Italian Debate on the Aggregate Consumption Function: The Life Cycle Hypothesis versus Kaldor’s Theory (1960s-1970s)

Abstract

The paper reconstructs the Italian debate on the aggregate consumption function, focusing on the difficult acceptance of Modigliani, Brumberg and Ando’s life cycle hypothesis and the external and internal factors that explain it. The increasing attention to the effects of income redistribution on consumption coupled with the strong influence that post-Keynesian economics exercised on the theoretical and political debate of that time led to a widespread acceptance of Kaldor’s theory as an alternative to the life cycle explanation of savings behavior.

Keywords: Life Cylce Hypothesis, Consumption Function, Modigliani, Kaldor

JEL Classification: B21, B22, B23