=+e. In A(e), we described a policy that imposes a tax t on wages and a subsidy

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=+e. In A(e), we described a policy that imposes a tax t on wages and a subsidy s on savings. Suppose that the tax lowers the wage retained by the worker to 11 2 t2w and the subsidy raises the effective interest rate for the worker to 1r 1 s2. Without necessarily redoing the optimization problem, how will the equations for the optimal levels of c1

, c2

, and , change under such a policy?

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