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• Presentation of two models of consumption/saving

  175-184

  Katalin Buzasi

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  The Permanent Income Hypothesis (developed by Friedman) and the Life Cycle Hypothesis (developed by Modigliani) are the most popular consumption or saving theories in economics. The aim of this paper is to introduce the main features and consequences of the models mentioned above. The first part of this paper introduces the historical circumstances in which the hypotheses were developed. In the second part we mention various debates on the theories which helped tp clarify some of their more complex aspects. The aim of the third part is to introduce various ways of expanding and supplementing the basic theories and convert them into more realistic ones.

  Journal of Economic Literature (JEL) code: E21