Intertemporal substitution can magnify the effects of a negative shock,thus leading to a recession.

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Intertemporal substitution refers to the way in which consumers may adjust their consumption patterns over time in response to changes in prices or income. If a negative shock such as a recession reduces income or increases the price level, consumers may choose to reduce their current consumption and save more, in order to maintain their desired level of lifetime consumption. This can magnify the negative effects of the shock, leading to a deeper and more prolonged recession.

Intertemporal Substitution Can Magnify the Effects of a Negative Shock,thus