(30 points) Consider an economy with two types of consumers labeled h and I. Consumers have preferences for current and future consumption given by:…

Some consumers are very patient and have a high βh, others are impatient and have a low βl (βl < βh). Note that β is the weight in the future consumption, or the discount rate. Consumers′ are equal in their income and there are no taxes (that is, t = t = 0). The government does not have to finance any spending.

There are N consumers of each type in this economy. That is, in total there are 2N consumers, N of them are type h and are type l.

I recommend that you make a change of variable to solve this problem: instead of working with the net interest rate (r), work with the gross interest rate R = 1 + r.

Find the equilibrium if y = y’ = y-bar.

  1. First, solve the problem of a type h consumer. This is to find ch, ch’ and sh.
  2. Second, solve the problem of a type l consumer. This is to find cl, cl’ and sl.
  3. Finally, using the market clearing condition to solve for R as a function of exogenous variables.

(30 points) Consider an economy with two types of consumers labeled h and I. Consumers havepreferences for current and future consumption given by:UhCh; Ch )= In ch + Bh In chul(c. ci) =Ing+Biinc

Show more







Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10