In a series of paper written in the 1950s

In a series of paper written in the 1950s, Franco Modigliani and his collaboration Albert and Richard Brumberg used Fisher’s model of consumer behavior to study the consumption function. One of their goals was to solve the consumption puzzle that is to explain the apparently conflicting pieces of evidence that came to light when Keyne’s consumption function was confronted with the data. According to Fisher’s model, consumption function depends on person’s lifetime income and how the consumption function effects the income of a person and the interest rate whereas Modigliani emphasized that income varies systematically over people’s lives and that saving allows consumers to move income from those times in life when income from those times in life when ncome is high to those times when it is low. This interpretation of consumer behavior formed the basis for his life-cycle hypothesis.