3. Comparing optimal consumption with complete and incomplete markets. Consider a two-period small open endowment economy facing
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3. Comparing optimal consumption with complete and incomplete markets. Consider a two-period small open endowment economy facing the world interest rate r for riskless loans. Date 1 output is Y. There are 8 states of nature on date 2 that differ according to the associated output realizations Y2(s) and have probabilities (s) of occurring. The representative domestic consumer maximizes the expected lifetime utility function?
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Related Book For
Foundations Of International Macroeconomics
ISBN: 9780262150477
1st Edition
Authors: Maurice Obstfeld, Kenneth S. Rogoff
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