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Suppose that the government arranges a transfer v to this agent by issuing bonds. In the future, the government will tax the agent to be
Suppose that the government arranges a transfer v to this agent by issuing bonds. In the future, the government will tax the agent to be able to buy back the bonds. The new constraints of the agent are:c1 s1 =1/2 y v, c2 = y (1 r)s1 (1 r)v, s1 0. What is the impact of the government transfer on the agent's optimal consumption in the first period
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