Q: Consider the social planner’s problem that we analyzed in Section 2.
Consider the social planner’s problem that we analyzed in Section 2.4: the planner wants to maximize∞ t=0 e−βt[c(t)1−θ/(1−θ)]dt subject to k(t)=f (k(t))−c(t)−(n+g)k(t). (a) What is the current-value...
See AnswerQ: Consider the Romer model of Section 3.5. For simplicity
Consider the Romer model of Section 3.5. For simplicity, neglect the constraint that LA cannot be negative. Set up the problem of choosing the path of LA(t) to maximize the lifetime utility of the rep...
See AnswerQ: Consider the model of investment in Sections 9.2 9.
Consider the model of investment in Sections 9.2 9.5. Describe the effects of each of the following changes on the K = 0 and q = 0 loci, on K and q at the time of the change, and on their behavior ove...
See AnswerQ: Consider the model of investment in Sections 9.2 9.
Consider the model of investment in Sections 9.2 9.5. Suppose it becomes known at some date that there will be a one-time capital levy. Specifically, capital holders will be taxed an amount equal to f...
See AnswerQ: Let H denote the stock of housing, I the rate of
Let H denote the stock of housing, I the rate of investment, pH the real price of housing, and R the rent. Assume that I is increasing in pH, so that I =I(pH), with I(•) > 0, and that H =I − δH. Assum...
See AnswerQ: Consider the model of Section 10.1. Assume that utility
Consider the model of Section 10.1. Assume that utility is logarithmic, that β =1, and that there are only two states, each of which occurs with probability one-half. In addition, assume there is only...
See AnswerQ: Consider the steady state of the Diamond Mortensen Pissarides model of Section
Consider the steady state of the Diamond Mortensen Pissarides model of Section 11.4. (a) Suppose that φ =0. What is the wage? What does the equilibrium condition (11.70) simplify to? (b) Suppose that...
See AnswerQ: Consider modeling the noise traders in the model of equations (10
Consider modeling the noise traders in the model of equations (10.15) (10.23) of Section 10.4 in terms of shocks to the quantity they demand of the risky asset rather than to their expectations of the...
See AnswerQ: Consider the Diamond Dybvig model described in Section 10.6,
Consider the Diamond Dybvig model described in Section 10.6, but suppose that ρR < 1. (a) In this case, what are ca∗ 1 and cb∗ 1 ? Is cb∗ 1 still larger than ca∗ 1 ? (b) Suppose the bank offers the co...
See AnswerQ: Consider deposit insurance in the Diamond Dybvig model of Section 10.
Consider deposit insurance in the Diamond Dybvig model of Section 10.6. (a) If fraction φ>θof depositors withdraw in period 1, how large a tax must the government levy on each agent in period 1 to be...
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