Answer to Question #214009 in Macroeconomics for INGRID

Question

Why literature describe the Keynesian consumption function as a short-run model?

Answer 1

The Keynesian consumption function is described as a short-run model because consumption is more dependent on psychological elements like the desire to save and institutional factors like the existing pattern of income and wealth distribution. In the short term, such factors do not change substantially. As a result, as Keynes believed, the consumption function is rather constant.