Estimation of Consumption Functions Using Savings Motive Hypothesis (SMH)

In this paper a new consumption function is derived based on savings motive hypothesis (SMH). The major theory behind the SMH that households save part of their income in period 1 and transfer it to 2. Implying addition autonomous variable validity tested by using data from India, Kenya, South Africa, Saudi Arabia, UK USA for 1970 2018. analyses are performed World Bank Data generalized least squares (GLS) method. demonstrates estimation could be done more accurately function. MSH psychological theory. Some results can used making both household national welfare decisions e.g. use short run global marginal propensity consume found 0.43.