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The problem of the firm in the two-period model with investment is T' max V = + {N,N',I} 1+r 7 where = 2K*NB WN 1,
The problem of the firm in the two-period model with investment is T' max V = + {N,N',I} 1+r 7 where = 2K*NB WN 1, T' = Z'K'N'B w'N' + (1 d) K' and K' = (1 d) K +I. Parameters a and are both positive and sum up to less than 1, i.e. a > 0, > 0 and (a + ) 0, > 0 and (a + )
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