Chapter Ten
Intertemporal Choice
Intertemporal Choice
Persons often receive income in
lumps; e.g. monthly salary.
How is a lump of income spread over
the following month (saving now for
consumption later)?
Or how is consumption financed by
borrowing now
Microeconomics I
Assignment I
Graduate School of Management and Economics
Sharif University of Technology
Due time: Saturday 17th of Mehr 1395
Issue date: 6 Mehr 1395
1. if is rational, show the following statement is true:
if x y z, then x z.
is both i
Homework 4: Theory of Dynamic Programming
Mohammad Hossein Rahmati
October 17, 2015
1. SLP
1
Exercise 5.3 (correction k = argmaxk0 [f (k) k])
2. (A Tree-Cutting Problem) SLP Exercise 5.5
3. Show that the Bellman Equation of problem 6 in Homework 2 is Cont
In the name of GOD
Fiscal Policy
a. Taxes
content
Introduction
Output tax
Non-distortionary/Lump-Sum taxes
Distortionary/Proportional taxes
Laffer curve
Labor tax
Non-distortionary/Lump-Sum taxes
Distortionary/Proportional taxes
Laffer curve
Intr
In the name of GOD
Fiscal Policy
b. Social security
Dr. Seyed Ali Madanizade
Prepared by: M. Azizirad
2
content
Overlapping generation models
Optimizer agents
Social planner
Funded pension systems
Pay-as-you-go/unfunded systems
3
Overlapping generati
Homework 7: Recursive Competitive Equilibrium
Mohammad Hossein Rahmati
October 17, 2015
1. Consider a neoclassical growth model with logarithmic felicity function, Cobb-Douglas pro l) = Ak l1 , full depreciation of the capital stock in one period (the
duc
Homework 5: Dynamic Programming & Speed of Convergence
Mohammad Hossein Rahmati
October 17, 2015
1. (Adjustment cost model) Consider the following discrete-time dynamic programming problem in sequence formulation;
max
cfw_xt+1 t=0
X
t [h(xt ) a(xt+1 xt )
Homework 6: Sequential Competitive Equilibrium
Mohammad Hossein Rahmati
October 17, 2015
1. Consider a two-consumer, two-period exchange economy with date-0 trading. Type-1 consumers are endowed with 2 units of the consumption good in period 0 and 0 units
In the name of GOD
Fiscal Policy
c. Public debt
Dr. Seyed Ali Madanizade
Prepared by: M. Azizirad
2
content
Ricardian equivalence
Optimal taxation
3
Ricardian equivalence
Government: Two-period model:
=
+
=
1+
+
1+
=
+
1+
4
Ricardian equivalence
Gove
Homework 8: Stochastic Optimization Problem
Mohammad Hossein Rahmati
October 17, 2015
1. Do Exercise 8.10 Early resolution of uncertainty, from Ljungquist, Sarget, 2nd ed.
2. Do Exercise 13.4 The term structure and consumption, from Ljungquist, Sarget, 2n
Homework 3: Application of Dynamic Programming
Mohammad Hossein Rahmati
October 17, 2015
1. A consumer
P t seeks to maximize her lifetime utility of consumption and leisure, which is given
by:
t=0 u(ct , lt ), where ct is consumption in period t and lt is
Homework 2: Dynamic Optimization
Mohammad Hossein Rahmati
October 17, 2015
1. Consider the one time period problem we solved in the class. Lets change the production
function to zf (n). Here z is called total factor productivity. Find the first order cond