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Life Cycle Hypothesis

Sunday, March 26, 2017 3:57
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(Before It's News)

from the Richmond Fed

– this post authored by Tim Sablik

What determines how individuals save and spend their income over their lifetimes? It may seem like simply a question of personal preference, but the answer can have big implications for the economy as a whole. The life cycle hypothesis, which argues that people seek to maintain the same level of consumption throughout their lifetimes, is one way that economists have answered the question – but it was not the first.

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