Suppose in a two-period economy, there are always N consumers which can be represented by a consumer who has the following form of preference lnC A(1 l) + [lnC0 A(1 l0)]; where, C and C0 are consumptions in the rst and the second period, respectively. Besides, there is only one representative rm which employs labor N and capital K to produce consumption goods. The production function is shown in the following. Y = zK N1