Consumption and Saving, Again

Some economists (the late Robert Theobald, for example) believe that an event of just this kind -- a drop in autonomous consumption -- got the Great Depression of the 1930's started off. In general, the model suggests, changes in autonomous consumption can be a source of economic fluctuations. What is in store for us in the late 1990's?

Historically, American saving was very low during the 1980's and early 1990's. (Many people blamed that on the attitudes of "baby boomers," or argued that the "boomers" were in a stage of their life cycle when savings were normally low). Thus, it doesn't seem likely that "too much saving" has been a problem in the U. S. in the 1990's. Indeed, some economists would argue -- quite the contrary.

Consumption and Booms