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"onsi!e twoperio! small open economy presente! in class. lrelerences are !escriie! ' by the lifetime utility function U(01,C2) =10gC'1 + log C2,...

Just needed helping solving 2a,b in the following attachment below:Tutor Question.jpg

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2. ”onsi!er t!e two—perio! small open economy presente! in class. lrelerences are !escriie! ‘ by the lifetime utility function
U(01,C2) =10gC'1 + log C2, Where log denotes the common logarithm. The representative household receives an exoge—
nous endowment each period, given by Y1 = 30 and Y2 = 35. Agents start period 1 With zero net foreign wealth, B1 = 0. The interest rate in global capital markets is 10 percent,
7" = 0.1. a. Write the two period—by—period budget constraints and the intertemporal budget con— straint. b. Compute the equilibrium levels of consumption in periods 1 and 2. Recall that (153% = 1 ,_
a, forz— 1,2.
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