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Consider a two-period model with income endowments. Suppose the utility function for each period is given by () = 1 1 1 1 1, and
Consider a two-period model with income endowments. Suppose the utility function for each period is given by () = 1 1 1 1 1, and () = = 1. The budget constraint is 2 = (1 + )(1 1 ) + 2 a. Find the Euler equation for the general case in this example (for 1). The discount rate for utility is , introduced just as in class
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