Lato-kosero

This theory was developed by Franca Modigliani, Nobel Laureate of 1985, Richard Brumberg and Albert Ando in 1950s and 1960s. It is called MBA hypothesis. According to this theory, consumption is a function of the lifetime expected income of the person. The consumption depends on the resources available to the person, the rate of return to the capital, the spending plan and the age at which the plan is made. It depends on:  i. Resources  ii. Spending plan  iii. Rate of return on capital  iv. The age at which the plan is made  According to Modigliani the point of departure of the life cycle model is the hypothesis that consumption and saving decision of household at each point of time reflects more or less conscious attempt to achieve the preferred distribution of consumption over the life cycle. Subject to the constraint imposed by the resources occurring to the household over it is a lifetime. Here