Budget dependent on external factors is exogenous budget. The size of the budget is dependent on the income previously generated, and the consumption to follow is dependent on the budget. Yet the economic productivity is external to the autonomous budget and influences the schedule of income generation alongside the size and structure of expenditure. Under such conditions, the budget varies according to the situation in the economy as a whole: when the income is great, then the expenditure is great, and when the income is diminishing, then the expenditure is diminishing too.
Historical Backdrop
• FRANK KNIGHT Risk, Uncertainty, and Profit: entrepreneurship and uncertainty.
• DANIEL ELLSBERG Risk, Ambiguity, and the Savage Axioms: immeasurable uncertainty.
• ALVIN HANSEN Monetary Theory and Fiscal Policy: exogenous limiting factors.
• MILTON FRIEDMAN A Theory of Consumption Function: consumption function and the effect of uncertainty.
