Explain how the life cycle hypothesis resolves the Kuznets’ puzzle on consumption function.

The Life Cycle Hypothesis (LCH), developed by Franco Modigliani and his collaborators, offers a comprehensive framework for understanding how individuals make consumption decisions over their lifetime. It plays a significant role in addressing the Kuznets’ puzzle regarding the consumption function, which pertains to the observed relationship between income and consumption at different levels of economic development.

The Kuznets’ puzzle arises from empirical observations that, at different stages of economic development, the consumption function does not seem to behave as predicted by traditional economic theories. In particular, traditional Keynesian consumption theory posits that consumption is primarily a function of current income. According ________ _________ _______ ___ ______ _________ ___ _________ ______ __________ ___.
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