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Corporate Retentions and Consumers’ Expenditure

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  • Michael Sumner

Abstract

Corporate retained profits have well‐determined effects on both total and non‐durable consumers’ expenditure, with coefficients which do not differ significantly from those on disposable income in a standard consumption function; the effects also appear in a life‐cycle model which excludes disposable income. Retentions convey no useful information about future values of the other arguments of either consumption function. The implications of an alternative explanatory hypothesis, of a discrepancy between the principles and practice of national accounting, are not rejected.

Suggested Citation

  • Michael Sumner, 2004. "Corporate Retentions and Consumers’ Expenditure," Manchester School, University of Manchester, vol. 72(1), pages 119-130, January.
    • Handle: RePEc:bla:manchs:v:72:y:2004:i:1:p:119-130
    DOI: 10.1111/j.1467-9957.2004.00383.x
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    Cited by:

    1. Christian A Belabed & Thomas Theobald & Till van Treeck, 2018. "Income distribution and current account imbalances [Notes on capacity utilisation, distribution and accumulation]," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(1), pages 47-94.
    2. Jan Behringer & Till van Treeck, 2023. "The corporate sector and the current account," Oxford Economic Papers, Oxford University Press, vol. 75(3), pages 826-857.
    3. Jan Behringer & Till van Treeck, 2013. "Income distribution and current account: A sectoral perspective," IMK Working Paper 125-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Bill Martin, 2009. "An Augmented UK Private Expenditure Function," Working Papers wp384, Centre for Business Research, University of Cambridge.
    5. Theobald, Thomas & Grüning, Patrick & van Treeck, Till, 2015. "Income inequality and Germany's current account surplus," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112846, Verein für Socialpolitik / German Economic Association.

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