Substitution over Time in Consumption and Work

  • Robert E. Hall
Part of the International Economic Association Series book series (IEA)


Fifty years after the publication of Value and Capital, the view of the role of the interest rate in macroeconomic fluctuations expounded there has never been more influential. According to that view, a higher interest rate brings a deferral of spending and an acceleration of production; a temporarily high real wage causes a burst of work effort. A huge body of research in the past decade has sought to clarify the details of equilibration through the interest rate and to measure the strength of intertemporal substitution effects. My purpose here is to comment selectively on the new developments in intertemporal substitution research as it bears on macroeconomic fluctuations. All the research fits nicely into the intertemporal framework of Value and Capital.


Interest Rate Marginal Cost Real Wage Real Interest Rate Work Effort 
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Copyright information

© International Economic Association 1991

Authors and Affiliations

  • Robert E. Hall
    • 1
  1. 1.Stanford University and National Bureau of Economic ResearchUSA

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