Author: Richard Blundell
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How important are the ups and downs of the economy for individual families? Personal setbacks have more permanent effects on households’ lifetime earnings than a general economic downturn. But macroeconomic shocks are still critical because they set the stage on which microeconomic shocks play out.
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Even good used cars sell at a discount because buyers can’t tell them apart from bad ones – so-called lemons. Nevertheless, many people still sell good cars – but the lemons penalty reduces car turnover, slows down upgrades and limits low-wealth households’ ability to use cars as financial buffers.
