question au015

a briefing note for information (not a briefing note for decision) on either electricity prices for Ontario in language that is understandable to an elected official such as a Minister of Energy (as opposed to an expert such as an engineer or economist). The student can choose from among the following leaders in DSM policy and programs: Yukon, BC, Alberta, Manitoba, Ontario, Nova Scotia or New Brunswick. In this briefing note, explain at least two energy services (e.g., space and water heating; from BUSI 3503 and Unit 2 readings) that are included in the DSM programs and regulations, what customer types are targeted (e.g., residential buildings, small commercial, large commercial, industrial, transportation), who operates and manages the DSM, how the programs are funded, and how the regulations are enforced.

The briefing note should be Lengthy and :

written in layperson language that could be understandable to an elected official with limited background on the topic; focused on those topics that are relevant for government decision makers; not including extensive background information that does not aid in making a decision; evidence-based and not anecdotal; and inclusive of at least three citations from the required or optional reading

Each period, an innitely-lived agent divides his endowment of 1 unit of time between human capital production (a non-market activity) and work in order to maximize the present discounted value of lifetime earnings. Let ht denote the human capital stock at time t and let 1 lt be time spent working. Income each period is given by ht (1 lt) w where w is the rental rate of human capital. New human capital (i.e. investment in human capital) is produced via the production function (ht lt) ; 2 (0; 1): Note that human capital depreciates at the rate and the real interest rate is given by the constant, r: (a) Express the agents maximization problem as a dynamic programming problem and identify the states and controls. (b) Derive and interpret the Euler equations associated with this problem. (c) Assume that a steady-state exists so that ht = h and lt = l: Solve for these steady-state values. (d) What is the impact of the two prices (w; r) on the steady-state values? Expla

2. (20) Consider a representative agent economy in which preferences are given by: E0 X1 t=0 t " c 1 t 1 tht #! ; 2 (0; 1); > 0 where E denotes the expectations operator and t is an i:i:d: random variable which aects the disutility of labor supply. Output in the economy is produced by rms that use labor and an inelastically supplied unit of nondepreciating capital (owned by rms - you can think of this as land). The choice of labor is made to maximize prots each period: max ht t = yt wtht yt = h 1 t ; 2 (0; 1) where yt denotes output and wt is the wage. The prots are returned to the households. In addition to labor supply, agents also trade one period bonds (risk-free) that cost pt at time t and return 1 unit of consumption in period t + 1: Given this environment, do the following: (a) Express the households problem as a dynamic programming problem and derive the associated necessary conditions. Note that households take as given rm prots, the wage and the price of bonds (i.e. it is a standard competitive economy). (b) Find the competitive equilibrium allocation by solving the social planners problem for this economy. (c) Solve for the policy functions which describe equilibrium consumption and labor. Provide an explanation for the implied behavior of these variables. (d) Determine the solution for the equilibrium price of bonds. Explain how the preference shock, t , aects the price of bo

3. (20) Consider a standard optimal growth model in continuous time in which the aggregate production function is given by: Y (t) = F [K (t); N (t)] where F () has standard properties and N (t) is growing at the rate n > 0:The depreciation rate of capital is given by > 0:The single household inelastically supplies labor each period and then chooses consumption and savings in order to maximize: Z 1 t=0 e tU (c (t)) N (t) dt where c (t) = C(t) N(t) is per-capita consumption and U () has the functional form: U (c (t)) = ( c(t) 1 1 ; 6= 1 ln c (t) ; = 1 It is assumed that all parameter values are such that a well-behaved equilibrium exists. In addition to output produced via the production function, output arrives exogenously every period at the rate of units per person. Given this environment, do the following: (a) Express the social planner problem in intensive (i.e. per-capita) form - show your derivation. (b) Write down the Hamiltonian for this problem and derive the necessary conditions; include the transversality condition. (c) Derive the phase diagram for this economy - be sure to explain your derivation. (d) Dene the steady-state. What fraction of the exogenous output, ; is consumed in steady-state? W

4. (20) Consider the standard growth model in discrete time. There is a large number of identical households normalized to 1. Each household wants to maximize life-time discounted utility U(fctg 1 t=0) = X1 t=0 tu(ct); 2 (0; 1): Each household has an initial capital k0 > 0 at time 0, and one unit of productive time in each period that can be devoted to work. Final output is produced using capital and labor, according to a production function, F, which has the standard properties discussed in class, most notably, it is increasing in both arguments and exhibits CRS. This technology is owned by rms (whose measure does not really matter because of the CRS assumption). Output can be consumed (ct) or invested (it). Households own the capital (so they make the investment decision), and they rent it out to rms. Let 2 (0; 1) denote the depreciation rate of capital. Households own the rms, i.e., they are claimants to the rmsprots, but these prots will be zero in equilibrium. The function u also has the usual nice properties, which I will not spell out here since you will not need them explicitly. In this economy there is a government that collects taxes and (for simplicity) throws the tax revenues into the ocean. The government can implement one of the following two alternative taxation systems, let us call them System A and System B. System A is a proportional tax, 2 [0; 1], on agentscapital income. In other words, if the government implements System A, it collects a fraction of all the income that agents earn by renting out their capital to rms. System B is a proportional tax, 2 [0; 1], on agents investment. In other words, if the government implements System B, it collects a fraction of all the resources that agents choose to allocate into investment. (a) Write down the problem of the household recursively, under both taxation systems.1 Pay special attention to the budget constraints. These constraints will not be the same under the two specications. Also, notice that I am not asking you to dene a RCE in detail; just state the representative agents problem within a RCE environment. (b) Describe the steady state equilibrium capital stock under taxation System A, for any given 2 [0; 1]. Denote this object by K A ( ). (c) Describe the steady state equilibrium capital stock under taxation System B, for any given 2 [0; 1]. Denote this object by K B ( ). (d) Assume that F(K; N) = Ka N1a , a 2 (0; 1). Provide closed form solutions for the terms K A ( ); K B ( ), described in parts (b),(c). Hint: Here, it is more convenient to work directly with F, i.e., do not work with the auxiliary function f that we introduced in the lectures. (e) Plot the terms K A ; K B , calculated in part (d), against 2 [0; 1] and in the same graph. Discuss briey. (f) Describe the govern