homework7 2010 - c) Show that the solution satisfies the...

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ECN/APEC 7240 Spring 2010 Homework 7 Due 4/7/10 1) Consider the corresponding planner’s problem associated with the production model, in which, given Y 0 , the planner maximizes = + 0 1 ) , ( t t t t Y Y S β , where . ) ' ( 2 2 1 ) ' , ( 2 2 1 0 Y Y d Y A Y A Y Y S - - - = a) Show that this reduces to a special case of the linear regulator problem, as presented in class. b) Obtain the solution to the planner’s problem.
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Unformatted text preview: c) Show that the solution satisfies the difference equation for the recursive competitive equilibrium: [ ] . ) ( ) ( 2 1 1 1 1 =---+-+ + + + t t t t t Y Y d Y A A Y Y d d) Show that in the long run, production converges to a steady state value and determine its value....
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This note was uploaded on 01/09/2011 for the course ECON 7140 taught by Professor Kutler during the Spring '10 term at Utah Valley University.

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