3 Constraints Consider the two periods model. Suppose now a household has to pay lump-sum tax to the government. Thus, this household's constraints are YIfZCf'Fst'i'n Ye+ (1+ n)St = Ct+1+ St+1 + Ti+1 Here, It represents the lump-sum tax this household pays to the government in period t and It+1 represents the lump-sum tax this household pays to the government in period t+1. 1. Explain why Siti = 0. 2. Given St+1 = 0. Derive the Life-time budget constraint for this household as Ct+1 = Yt - It + Yt+1 - Ti+1 Ct + 1+It 1+rt