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Deterministic optimal growth model. Let 1- 7 A representative individual solves subject to f(k) max c Jo 1-e-ak x fe-Pu(ci)dt k = f(ke) -

 

Deterministic optimal growth model. Let 1- 7 A representative individual solves subject to f(k) max c Jo 1-e-ak x fe-Pu(ci)dt k = f(ke) - ce (a) Write the appropriate Hamiltonian (b) State the solution for consumption as a function of the costate vari- able. [HINT: You might need to take a logarithm.] ko = k a (c) State the equation for the costate variable. (d) State the steady-state capital. (e) State the steady-state interest rate. (f) State the flow of profit in the steady state. (g) State the price of an equity share in the representative firm in the steady state.

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a The appropriate Hamiltonian is H uc fk c k uc 1eak c ... blur-text-image

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