# derivation of savings function

• Feb 13th 2011, 01:38 AM
aldza88
derivation of savings function
Hi,can someone please help me with this consumption function. I need to derive savings function from it.

C=C0+cTr+c(1-t)Y

C0-autonomous consumption
c - marginal propensity to consume
• Feb 13th 2011, 10:15 AM
dwsmith
Quote:

Originally Posted by aldza88
Hi,can someone please help me with this consumption function. I need to derive savings function from it.

C=C0+cTr+c(1-t)Y

C0-autonomous consumption
c - marginal propensity to consume

What does the savings function look like?
• Feb 17th 2011, 04:06 AM
Tom G
Quote:

Originally Posted by aldza88
Hi,can someone please help me with this consumption function. I need to derive savings function from it.

C=C0+cTr+c(1-t)Y

C0-autonomous consumption
c - marginal propensity to consume

I can't work this out now, as I've got an economic maths test soon, but this might help:
The marginal propensity to consume and the marginal propensity to save(s) sum to 1, hence: s=1-c So I'd be inclined to start with that and go from there.

Also what, if any assumptions have been made? Could you also define T and t please? I presume r is the rate of interest?