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-income households were slightly more affected than others due to their consumption patterns. The savings rate also depends on employment … status, income, and age. While low-income households even go into debt, many other households are sometimes saving 20 percent …
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There is increasingly dissatisfaction with the traditional New Keynesian IS curve linking the interest rate to consumption. The central bank'™s interest rate target is found to differ significantly from the implied consumer Euler rate thus impairing the working of the (traditional) monetary...
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