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5. The neoclassical consumption model with log utility and 8 # 1: With log util- ity, the solution to the neoclassical consumption model is given
5. The neoclassical consumption model with log utility and 8 # 1: With log util- ity, the solution to the neoclassical consumption model is given implicitly by the first two equations on page 466, the Euler equation and the intertemporal budget constraint: C future (l + R) I":tcndzly Chuture py Ctoday 1+ R = X. There, we solved these two equations for ,q,, and cgq, in the special case where B = 1. This exercise considers the case where B differs from 1. (a) Solve these two equations for ,,q,, and 4, when B # 1. (b) Verify that the solution matches what we obtained in the text when 8 = 1. (c) When B
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