The consumption function is explicitly affected by agents’ wealth holdings.12 Agents have shorter average horizons than presumed under the text-book permanent income hypothesis and the model further allows for the presence of agents that do not optimize but rather exhibit ‘hand-to-mouth’ behaviour. Last, but not least, risk aversion and income uncertainty also play a role for consumption behaviour.
This setup, for example, allows quantifying how larger income uncertainty reduces the power of forward guidance. All in all, I think that we are moving in the right direction. Nevertheless, the modelling of aggregate consumption is an area in which research is currently developing fast and we should be ready to learn from new findings.