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Help me do these macroeconomics questions (c) Use the solution to the firm maximization problem and the expression of P, to derive the formula (15).

Help me do these macroeconomics questions

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(c) Use the solution to the firm maximization problem and the expression of P, to derive the formula (15). NOTE: In their original QJE paper, there are a couple of typos! In particular, (12) and (13) are not correct if MRPL, and MRPK, are defined as in their paper following (12) and (13). As a hint: define 1 M. 1 PAY si MRPL, 1= 1 MRPL,, PY. and MRPK, similarly. (d) There is a large literature trying to link the distortions (Ty,,, TK., ) to financial frictions individual firms face. To see the relation between these exogenous taxes and credit constraints, suppose that there are no taxes (i.e. Ty. = TK. = 0) but firm i faces a credit constraint of the form Whyi + (RKsi PHYSi i=1 subject to M. Y. = (2) Determine P.. (b) Let As be the multiplier on the constraint (2). Show that the profit maximization of firm i in industry s is max (1 - TY.. ) As (Ysi)- Whyi - (1 + TKsi) RK si Ysi, Lsi.K si subject to Ys; = A,; Ko. Ll-a

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