1 Nonseparable utility A representative household enjoys utility from consumption and disutility from labor supply. He/she maximizes Et E Bi ( Ctti (1 - Ntti ) " ) 1-o, (1) j=0 subject to the budget constraint: Ct+j + Butj = Wt+j Nt+j + rtti Btti-1, (2) where Ct, wt, rt, and Nt represent consumption, the real wage, the rate of return (> 1), and labor supply in period t, respectively, and Be represents riskless bond holdings at the end of period t