2. Consider a (deterministic) neoclassical growth model in which the government taxes capital income at a proportional rate 1' > 0 and returns the proceeds as a lumpsum transfer to consumers. Consumers have identical preferences 2:0 t u(ct), where 0,; is periodt consumption. Each consumer is endowed with 160 units of capital in period 0 and with one unit of time in each period. A typical consumer's budget constraint in period t reads: (1 _7)7"tkt + wt + St : Ct + kt+1 (1 (Dist, where kt is periodt holdings of capital, 8,: is the lumpsum transfer, and rt and wt are the rental price of capital and the wage rate, respectively. Profitmaximizing firms operate a CobbDouglas production technology F (16,71) : ka'nl'\