4

and runs Part 4: OLG & RBC Models 4.1 [ Each individual lives for two periods. All individuals t and t+1. Preferences over consumption and leisure at given by the utility function at time t live fe imes t and t +1 a CaZmos a modified overlapping generations model. Time is In () + o In (1 14) + 3 In (-1) {0,8} (0,1) id: caroid Oints where lt is the Explain Iraction of the unit of (potential) labour supplied to the marke theoretically or verbally why it is never optimal to work full-time this Par mq5PD5oic 4.2 Assume that the optimal solutions to the individual maximization problem are giver by ce id:CqZmq5PD501C CqZmq5PD50ic: cit1 = 1 Wt 1+ B +0 B (1 + rt+1)wt 1+ B + 0 1+ B 1+ B + 0 . Wt 1+ B +0 lt = id:CqZmq5PD50ic: St. = Ppsoice how an increase in impatience affects the allocation in the economy. [3 points] and runs Part 4: OLG & RBC Models 4.1 [ Each individual lives for two periods. All individuals t and t+1. Preferences over consumption and leisure at given by the utility function at time t live fe imes t and t +1 a CaZmos a modified overlapping generations model. Time is In () + o In (1 14) + 3 In (-1) {0,8} (0,1) id: caroid Oints where lt is the Explain Iraction of the unit of (potential) labour supplied to the marke theoretically or verbally why it is never optimal to work full-time this Par mq5PD5oic 4.2 Assume that the optimal solutions to the individual maximization problem are giver by ce id:CqZmq5PD501C CqZmq5PD50ic: cit1 = 1 Wt 1+ B +0 B (1 + rt+1)wt 1+ B + 0 1+ B 1+ B + 0 . Wt 1+ B +0 lt = id:CqZmq5PD50ic: St. = Ppsoice how an increase in impatience affects the allocation in the economy. [3 points]