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Is it beneficial for the economy to have higher household savings, or is it just a fallacy of composition?

By Dr. Tanusree Chakravarty Mukherjee and Sim Hao En

The surge in prices of goods and services since mid-2021 has sparked fears of an impending recession in 2023, causing consumer confidence to dwindle in many countries. In times of uncertainty, it is natural to err on the side of caution and save money. While saving money is a prudent financial move for individuals, it can have detrimental effects on the economy as a whole.

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