Optimal propensity to consume, shadow prices and the great recession

There exists an optimal marginal propensity to consume (MPC). As two interpretations for optimal MPC have been outlined, the relationship is two-folded. First, in relation to investment and second, in relation to income. In this paper only the relationship with income 77t t r ato a o f r o ata o t Aa s rst o f co cs ra b c will be considered. The optimum is obtained by the shadow price of the household consumption behaviour. It is assumed that in an economic crisis, MPC moves from its optimal level. Therefore, reducing wellbeing. The shadow price should reflect this situation. This paper is an attempt to test whether the former hypothesis is true or false. For such a purpose, data about economic agents´ flow of funds has been compiled for the main world economies. The period comprises the years before, during and after the financial crisis. In addition, consumption patterns are analysed in order to evaluate the impact of deviations from the optimal MPC.