3. Another form of Hall's random walk. Show that if consumption has a conditional log- normal distribution

Question:

3. Another form of Hall's random walk. Show that if consumption has a conditional log- normal distribution and u(C) is isoelastic, then the natural logarithm of consumption follows a random walk with constant drift when (1+r)=1.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Foundations Of International Macroeconomics

ISBN: 9780262150477

1st Edition

Authors: Maurice Obstfeld, Kenneth S. Rogoff

See More Books

Question Posted: Nov 08, 2024 02:00 AM

See More Questions

(i) Write down the linear program relaxation for the vertex cover problem and solve the linear program. [6 marks] (ii) Based on the solution of the linear program in (b)(i), derive an integer...
Write 2 paragraphs about Macro risks and the term structure of interest rates article. No max word count, page count, or formatting requirements but has to be submit to my tutor's work as my own....
c23TwoCategoricalVariablesTheChi570 Page 570 10/4/11 5:21:55 PM ff-446 570 CHAP TER 23 /Users/ff-446/Desktop/4:10:2011 Two Categorical Variables: The Chi-Square Test A P P LY Y O U R K N O W L E D G...
Brothers Willie and Billie each own a gas station for the same national chain. As brothers, they are very competitive. They held a contest to see who could do a better job forecasting sales for their...
Do policies reflect political ideologies or public demands? Argue your position with examples.
An object of mass m starts from rest and slides a distance d down a frictionless incline of angle &. While sliding, it contacts an unstressed spring of negligible mass as shown in Figure P8.10. The...
3. Another form of Hall's random walk. Show that if consumption has a conditional log- normal distribution and u(C) is isoelastic, then the natural logarithm of consumption follows a random walk with...
Obtain an estimate of the integral from Prob. 22.1, but using two-, three-, and four point Gauss-Legendre formulas. Compute t for each case on the basis of the analytical solution.
This is a calculus Question. Find the equation of the tangent line to the graph of f(x)= 5x-1+sinx at (0,-1). thank you
2. Uncertain lifetimes and infinite horizons. One way to motivate an infinite individual planning horizon is to assume that lives, while finite in length, have an uncertain terminal date. In this...
4. Details on Deaton's paradox. Consider the linear-quadratic stochastic consumption model, in which (1+r) = 1 and G=1= 0 on all dates. (a) Use the current account identity together with consumption...
Erin Danielle, the bookkeeper for New York Company, has been trying to get the balance sheet to balance. The companys balance sheet is shown below. Instructions Explain to Erin Danielle in a memo why...
When Calcasieu Lumber Company takes timber and converts it into lumber, cardboard, and other paper products, the company is using a(n) _______. a. analytical process b. synthetic process c....
Compare the graphics of Traditional Management vs Modern Management. form a slide indicating an element of Modern Management that is applicable these days. The slide should include three layers: An...
Choose True or False. Practicing effective stretches and holding them long enough are both techniques for building flexibility. False: Holding stretches long enough is a technique for building...
a. At the end of January, $5,000 of accounts receivable are past due, and the company estimates that 20% of these accounts will not be collected. Of the remaining accounts receivable, the company...
For the MIPS datapath shown below, several lines are marked with X. For each one: Describe in words the negative consequence of cutting this line relative to the working, unmodified processor....
Early mountaineers boiled water to estimate their altitude. If they reach the top and find that water boils at 84C, approximately how high is the mountain?
A parking lot charges $3 for the first hour (or part of an hour) and $2 for each succeeding hour (or part), up to a daily maximum of $10. (a) Sketch a graph of the cost of parking at this lot as a...

3. Another form of Hall's random walk. Show that if consumption has a conditional log- normal distribution

Question:

Step by Step Answer:

Foundations Of International Macroeconomics

Students also viewed these Business questions