Q: There are two ways in which the Diamond and Samuelson models differ
There are two ways in which the Diamond and Samuelson models differ from textbook models. First, markets are incomplete: because individuals cannot trade with individuals who have not been born, some...
See AnswerQ: Consider the setup described in Problem 2.19. Assume that
Consider the setup described in Problem 2.19. Assume that x is zero, and assume that utility is constant-relative-risk-aversion with θ 1?
See AnswerQ: Consider N firms each with the constant-returns-to-
Consider N firms each with the constant-returns-to-scale production function Y= F(K,AL), or (using the intensive form) Y=ALf(k). Assume f0, f< 0. Assume that all firms can hire labor at wage wA and re...
See AnswerQ: Consider a Ramsey Cass Koopmans economy that is on its balanced growth
Consider a Ramsey Cass Koopmans economy that is on its balanced growth path. Suppose that at some time, which we will call time 0, the government switches to a policy of taxing investment income at ra...
See AnswerQ: Consider the policy described in Problem 2.10, but suppose
Consider the policy described in Problem 2.10, but suppose that instead of announcing and implementing the tax at time 0, the government announces at time 0 that at some later time, time t1, investmen...
See AnswerQ: Problem 2.11: (a) At time 0
Problem 2.11: (a) At time 0, the government announces that it will tax investment income at rate τ from time 0 until some later date t1; thereafter investment income will again be untaxed. (b) At time...
See AnswerQ: (a) Consider the Ramsey Cass Koopmans model where k at
(a) Consider the Ramsey Cass Koopmans model where k at time 0 (which as always the model takes as given) is at the golden-rule level: k(0) = kGR. Sketch the paths of c and k. (b) Consider the same ini...
See AnswerQ: Consider the Diamond model with logarithmic utility and Cobb Douglas production.
Consider the Diamond model with logarithmic utility and Cobb Douglas production. Describe how each of the following affects kt+1 as a function of kt: (a) A rise in n. (b) A downward shift of the prod...
See AnswerQ: Suppose Yt = F(Kt,AtLt), with F(•)
Suppose Yt = F(Kt,AtLt), with F(•) having constant returns to scale and the intensive form of the production function satisfying the Inada conditions. Suppose also that At+1 = (1 + g)At, Lt+1 =(1+n)Lt...
See AnswerQ: Suppose that in the Diamond model capital depreciates at rate δ,
Suppose that in the Diamond model capital depreciates at rate δ, so that rt = f (kt)−δ. (a) How, if at all, does this change in the model affect equation (2.60) giving kt+1 as a function of kt? (b) I...
See Answer
