TAsection02

TAsection02 - A > and < ³ < 1 . Also imagine that...

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Econ 110 TA section 3 February 9, 2009 t is given by u ( c t ; l t ) = ln ( c t ) + 1 ± (1 l t ) 1 with & > 0 and ± > 0 U ( c 1 ; c 2 ; l 1 ; l 2 ) = u ( c 1 ; l 1 ) + ²u ( c 2 ; l 2 ) with 0 < ² < 1 . Suppose that the production technology used by the household is y t = Al ± t in both periods, where
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Unformatted text preview: A > and < ³ < 1 . Also imagine that all households are identical. What will happen to the equilibrium interest rate as A permanently increase to a new level A . 2. What happens to interest rate if A increases temporarily, i.e. A in period 1 and A in period 2. 1...
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This note was uploaded on 05/13/2010 for the course ECON 110D taught by Professor Schmitt-grohe during the Spring '08 term at Duke.

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