3U} Consider The following twoperiod problem for the representative consumer. Y1=l Tl=2 Y2=54 T2=12 r={}.5 CI = consumption in the first period C2 = consumption
3U} Consider The following twoperiod problem for the representative consumer. Y1=l Tl=2 Y2=54 T2=12 r={}.5 CI = consumption in the first period C2 = consumption in The second period 3 = saving in the first period UnjCJ, C2) = Inll) + lnEC'Z} This time, the representative consumer faces a limited commitment problem. Because of such problem, the bank requires collateral when she borrows [110an from the bank. The collateral is the value of the houses she has {H}+ which can be sold in the second period for the price of P. Suppose the following values for H and P H = 2 P = 5.25 What is the optimal saving, 3*, that maximizes The representative consumer's lifetim A} is B) 10.5 c) is 13-) 112 E] None of above
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