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Solve the following two-period optimal growth problem: {1,2,2,3 } 1 + 2ject to 2 + 1 = 1 and 3 + 2 = 2 where
Solve the following two-period optimal growth problem: {1,2,2,3 } 1 + 2ject to 2 + 1 = 1 and 3 + 2 = 2 where 0 1, A 0 and 1 = 1. Show that it is optimal to save something for the second period capital stock. (Hint: it is obvious that 3 = 0 in optimum. Why?)
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