Consumption shocks and debt
Before discussing consumption, let me illustrate the general concept with an analogy. Suppose you have a population that experiences a major increase in life expectancy. Should that create a problem for public pensions? Many people would say “yes”, but it’s not obvious why. In general, improvements in life expectancy go hand in hand with improvements in the number of healthy years of life. So if your policy is for people to work 80% of their expected adult life, and then retire, it doesn’t matter whether life expectancy is 80... Читать дальше...