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Consider an economy characterized by the following production function and utility function, respectively Yt = f (kt , hy) = khq1-0 u(ct, ht) =

  

Consider an economy characterized by the following production function and utility function, respectively Yt = f (kt , hy) = khq1-0 u(ct, ht) = In(ct) +B In(1 - ht) i. Find the stationary state labor supply (h), consumption (T) and capital (K) for the economy described above. ii. Find the stationary state conditions for an example economy where the subutility function has the constant elasticity of substitution form u(ct, ht) = 1-0/1-0 + B In(1 - h+) and the production function is given by f (kt , ht) = kth++ On 1-0

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