Does consumption obey the Random Walk Hypothesis under the LCH-PIH? or Can consumption be predicted under the LCH-PIH? Economist Hall gave an insight into this question in his classical paper.

The existence of borrowing constraints leads to empirical rejections of the LCH-PIH. This research gives an significant explanation for this question and it also has a certain guiding significance for government policies which aim to increase social welfare. In this respect, how to overcome borrowing constraints is crucial for both individual and government.