See the page 18 of the pdf file titled "Investment KM model Part 2".

Baseline set-up K-M model with a borrowing constraint K-M model with an aggregate shock Equilibrium with a frictionless bond market . Aggregate the equations in the last slide over agents and substitute the market clearing condition for the bond market. Ke = So hire di . Aggregate consumption: Ct = (1 - B) (a+1-8)Kt-1 . Aggregate capital stock: Kt = B(a+1 -8)Kt-1 . Aggregate debt outstanding: ( IM ) ( 2+( - 8 1kt- 1 : aggregate networth Bt -= (1-u)B(a+1-8)Kt-1 for unproductive 1 + It agents . Quiz: Suppose (;,-1 + 1 - 8) k;,-1 is identical for all i. Is cit identical for all i and t in the equilibrium? 18 /75