<p>I did some quick research online and think I understand better. My basic understanding is that credit market imperfections restrict a consumer's capacity to borrow or to lend, thus his or her saving ceases to be a &quot;neutral&quot;/&quot;fully&quot; endogenous variable. (Rather than being a means to an end--maximize lifetime wealth--it becomes more and more of an end in itself?)</p>

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2021-01-11T22:48:57.670Z
2021-01-11T22:48:57.670Z
mtcicero
<p>Today in my Macroeconomics lecture, while covering the Real Intertemporal Model with Investment (Chapter 11 of Williamson's Macroeconomics), my professor proponed that a key assumption to not make consumer saving a central choice variable is the existence of perfectly functioning credit markets. This left many students and I slightly confused. Can somebody please help me get a good grasp of this? Thanks!</p>

<investment><markets><saving><credit><intertemporal-choice>
Perfectly functioning credit markets and consumer saving
mtcicero
# Perfectly functioning credit markets and consumer saving

(Asked by: username_0 on 2021-01-11)

Today in my Macroeconomics lecture, while covering the Real Intertemporal Model with Investment (Chapter 11 of Williamson's Macroeconomics), my professor proponed that a key assumption to not make consumer saving a central choice variable is the existence of perfectly functioning credit markets. This left many students and I slightly confused. Can somebody please help me get a good grasp of this? Thanks!

**Tags:** investment, markets, saving, credit, intertemporal-choice

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## 1 answers

### Answer by username_0 on 2021-01-11. Score: 0

I did some quick research online and think I understand better. My basic understanding is that credit market imperfections restrict a consumer's capacity to borrow or to lend, thus his or her saving ceases to be a "neutral"/"fully" endogenous variable. (Rather than being a means to an end--maximize lifetime wealth--it becomes more and more of an end in itself?)


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