2023-02-022023-02-02198411382766https://hdl.handle.net/10657/13666The goal of this dissertation is to test the hypothesis that economic agents jointly choose current consumption and labor supply, so as to maximize the present discounted value of current and future utility. We then investigate the response of such maximizing agents to transitory and permanent shocks from the exogenous environment consisting of real wages, real interest rates and taxes. The response of consumption is in broad conformity with the predictions of the premanent income hypothesis. Labor supply exhibits an inelastic response with respect to both shocks - a result at odds with an important postulate of the new classical macroeconomics.application/pdfenThis item is protected by copyright but is made available here under a claim of fair use (17 U.S.C. Section 107) for non-profit research and educational purposes. Users of this work assume the responsibility for determining copyright status prior to reusing, publishing, or reproducing this item for purposes other than what is allowed by fair use or other copyright exemptions. Any reuse of this item in excess of fair use or other copyright exemptions requires express permission of the copyright holder.Consumption (Economics)Labor supplyMathematical optimizationThesisreformatted digital