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This paper examines aggregate savings in a general equilibrium model where infinitely lived households face volatile … when income is constant. This additional capital accumulation has sometimes been interpreted as precautionary savings, but … I demonstrate that it is mostly generated by permanent-income motives. -- equilibrium interest rate ; aggregate savings …
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New Keynesian models of monetary policy assign no role to monetary aggregates, in the sense that the level of output, prices, and interest rates can be determined without knowledge of the quantity of money. We evaluate the empirical validity of this prediction by studying the effects of shocks...
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