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Question #3: (10%) Consider a Robinson Crusoe type of economy with one agent who maximizes the following X las + Al- Subject to 1-1 -
Question #3: (10%) Consider a "Robinson Crusoe type of economy with one agent who maximizes the following X las + Al- Subject to 1-1 - + -p+10,0) tal Write the equations that characterize a solution (Hint: formulate Lagranglan function) (b) Find the steady state values forck, and (c) Log-linearize the model around its steady state. (d) set-up a solution to the log-linear model in the form of system of equations. Question #3: (10%) Consider a "Robinson Crusoe type of economy with one agent who maximizes the following X las + Al- Subject to 1-1 - + -p+10,0) tal Write the equations that characterize a solution (Hint: formulate Lagranglan function) (b) Find the steady state values forck, and (c) Log-linearize the model around its steady state. (d) set-up a solution to the log-linear model in the form of system of equations
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