Unformatted text preview: P T of P is its inverse, such that Λ = P T Π P is a diagonal matrix of the eigenvalues of Π . Show that Π n = P Λ n P T .) b) Show that the unconditional probability that t = l = h = 1/2. c) What is the unconditional expectation of t ? The unconditional variance? The unconditional correlation of t and t +1 ? d) Suppose that u ( C ) = ln C , δ = 1, and F ( K , L ) = K α L 1. What is the equilibrium consumption function C ( K , A , )?...
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 Spring '10
 Kutler
 Microeconomics, Matrices, Probability theory, Singular value decomposition, Orthogonal matrix

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