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I really need a solution for this one Hope someone can help me with this! Intertemporal optimization An agent lives for two periods: In the

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Hope someone can help me with this!

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Intertemporal optimization An agent lives for two periods: In the first period she works and in the second period she is retired. The income in danish krones (salary) for this agent is w, > 0 and the income in danish krones (state pension) in the second period is w2. The agent has the utility function: u = log(c1) + Blog(c2). where c, is consumption in the first period and c2 is consumption in the second period. We assume B > 0. Task 3.a How do you interpret B and what would be reasonable to assume about B (besides B > 0)? Let the agent be able to both save and borrow at interest rate i, and normalize prices in the first period to 1 and prices in the second period p. Task 3.b) Set up the consumer's intertemporal budget condition. Task 3.c) Draw the consumer's budgetary condition in an (x, y)-diagram (by hand or with a program of your choice). Interpret the slope of the curve. Task 3.d) Solve the consumer's optimal savings. Task 3.e) The government is considering increasing the state pension w2. How does saving depend on w2.? Interpret your result. Task 3.f) The Government is considering introducing taxation of the return on private pension savings, T (note taxation of returns is on nominal returns and not on real). Calculate savings as expressions of exogenous parameters and the tax on private savings. Task 3.g) Does the saving depend positively or negatively on T

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