(c) Derive Home's date 1 consumption function, and show it can be written as $$ C_1(r) =...

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(c) Derive Home's date 1 consumption function, and show it can be written as

$$ C_1(r) = \frac{1}{1 + \beta} \left( Y_1 - I_1 + \frac{Y_2 - I_2}{1 + r} \right) $$

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Foundations Of International Macroeconomics

ISBN: 9780865716513

1st Edition

Authors: Rogoff, K.

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Question Posted: Nov 13, 2024 03:00 AM

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(c) Derive Home's date 1 consumption function, and show it can be written as $$ C_1(r) = \frac{1}{1 + \beta} \left( Y_1 - I_1 + \frac{Y_2 - I_2}{1 + r} ight) $$
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(b) Show that Home's II schedule can be written as $$ I_1(r) = K_2 - K_1 = \left( \frac{\alpha A_2}{r} ight)^{\frac{1}{\alpha}} - K_1 $$
(d) Using $$ I_2 = -K_2 $$ and the results of parts a-c, explain why
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(c) Derive Home's date 1 consumption function, and show it can be written as $$ C_1(r) =...

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Foundations Of International Macroeconomics

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