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Macro Consumption Function in an Islamic Framework وظيفة الاستهلاك الكلي في إطار إسلامي

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  • M. Fahim Khan

    (Islamic Development Bank, Jeddah, Saudi Arabia)

Abstract

Consumer behaviour, i.e., how the consumers allocate their income between different heads and how they decide how much to consume now and how much to save for future is a key topic in modern economic theory. The study of consumer behaviour bears implications for macro economic policies. Many modern economic theories conclude that savings are essential for economic growth. The more people save in a country, the more rapidly it will grow. With this background, modern economists conclude that the level of savings in an Islamic economy will be lower if people have to pay zakah on their savings. While presenting this argument, these modern economists consider zakah as a tax on savings that switches allocation of resources from savings (i.e., future consumption) to present consumption. Also, if we take part of the savings of the rich and give it to the poor, who will obviously consume it all, aggregate savings level in the economy, ceteris paribus, will naturally decline. The conclusion, therefore, follows that Islamization of an economy as it will result in lesser savings will adversely affect its growth. --

Suggested Citation

  • M. Fahim Khan, 1984. "Macro Consumption Function in an Islamic Framework وظيفة الاستهلاك الكلي في إطار إسلامي," Journal of Research in Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 1(2), pages 3-25, July.
    • Handle: RePEc:abd:crieja:v:1:y:1984:i:2:no:1:p:3-25
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    References listed on IDEAS

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    1. F.R. Faridi, 1983. "Theory of Fiscal Policy in an Islamic State نظرية السياسة المالية في الدولة الإسلامية," Journal of Research in Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 1(1), pages 15-30, January.
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    Cited by:

    1. Ghassan, Hassan B., 2015. "نموذج النفقة والإعتدال حسب كتابات الشيباني [Spending and Fairness Model Based on the Writing of Shibani]," MPRA Paper 80603, University Library of Munich, Germany, revised 2016.
    2. Ghassan, Hassan B., 2015. "A Consumer Model and Social Welfare Based on the Writings of Shibani (750-805 AD, 131-189 AH)," MPRA Paper 72441, University Library of Munich, Germany, revised 05 Mar 2016.
    3. Seif E.I. Tagel-Din, 1984. "M. Fahim Khan: Macro-Consumption Function in an Islamic Framework, Comments: Seif E.I. Tagel-Din محمد فهيم خان: وظيفة الاستهلاك الكلي في إطار إسلامي - تعليق: سيف الدين إبراهيم تاج الدين," Journal of Research in Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 2(1), pages 51-54, January.
    4. Zubair Hasan, 1990. "Munawar Iqbal: Zakah, Moderation and Aggregate Consumption in an Islamic Economy, Comment منور إقبال: الزكاة والاعتدال والاستهلاك الكلي في الاقتصاد الإسلامي - تعليق," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 2(1), pages 91-100, January.
    5. Ghassan, Hassan B., 2015. "Islamic Consumer Model, Fairness Behavior and Asymptotic Utility," MPRA Paper 67141, University Library of Munich, Germany.
    6. D.H. Norulazidah P.H. Omar Ali & Gareth D. Myles, 2010. "The Consequences of Zakat for Capital Accumulation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(4), pages 837-856, August.
    7. Khan, Muhammad Akram, 2020. "Theory of Consumer Behavior: An Islamic Perspective," MPRA Paper 104208, University Library of Munich, Germany.
    8. Amparo Huertas Bailén, 2018. "Islam and Mass Media Consumption in Post-Migration Contexts among Women from Northern Africa in Catalonia (Spain)," Societies, MDPI, vol. 8(3), pages 1-12, September.
    9. Munawar Iqbal, 1985. "Zakah, Moderation and Aggregate Consumption in An Islamic Economy الزكاة، والاعتدال في الإنفاق، والاستهلاك الكلي في اقتصاد إسلامي," Journal of Research in Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 3(1), pages 45-61, January.
    10. Murat Çokgezen, 2016. "Islamic economics in real life: Do Muslims give more than the others?," Working Papers hal-01349872, HAL.

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