SP26 ECON 302 002 Midterm 3

Due to the collapse in home prices during the financial crisis of 2008, households became more pessimistic and lowered their consumption share from 𝑎 ¯ 𝑐 to 𝑎 ¯ 𝑐 ′ < 𝑎 ¯ 𝑐 . In order to main...