Prescott, Card and Mankiw on income and substitution effects (applied to USA vs. EU)

Without holding either a Nobel, a John Bates Clark, a chair in Economics or even a PhD in Economics for that matter (yet!- working hard to finish my thesis soon), I will adventure to state that I am inclined to agree with the argument put forward in a recent post by Greg Mankiw (which is also Ed Prescotts’s position, but not so much David Card’s).
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