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4. Consider a stationary monetary equilibrium in which consumption of the young and old, real money balances, mi,t = P. Mut and the inflation rate
4. Consider a stationary monetary equilibrium in which consumption of the young and old, real money balances, mi,t = P. Mut and the inflation rate are constant over time. Assume that the utility function takes the form u(c) = " , 0 0 and that money growth is pushed towards infinity, that is, zoo. What happens to mi, c and c2 in this limiting case? Provide some intuition with reference to the individual's optimal intertemporal consumption trade-off condition
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