A neglected controversy in the modelling of consumers' expenditure

In 1989 and 1992, Thomas noted the divergence of the 'stylisedhistory' of the consumption function from the true sequenceof events in its early history. To the list of overlooked elementscan now be added the debate on the cyclical nature of consumptionconsidered here. Analysis of the data used in the original studiesshows a simplistic model considered at the time to be the 'best'available. This contrasts sharply with Spanos (1989), who wascritical of the methods of the initial consumption researchers.However, use of recursive estimation shows concerns over a varyingmarginal propensity to consume to be unwarranted.