Friedman's permanent income hypothesis has laid the foundation of modern economics and theory of consumption and savings. But the increasing amount of transitory income generating over the last few decades and the dependencies of individuals on the same, have compelled the economists of the modern era to give some thought to it. Even at the policy levels, transitory income has been a big issue for deliberation where from a significant portion of GDP is generated. This paper attempts to review the researches over the years carried out on transitory income across the globe and put forward a framework for dealing with it in the light of individual's consumption and savings ’propensity.
Permanent Income, Transitory Income, Consumption Propensity, Savings Propensity
