Exercise 22.7. Consider a model in Section 22.3 and suppose that the middle class are in political power. Characterize the Markov Perfect Political Economy Equilibrium in this case. Derive the discounted utility of the elite when the middle class are in control of politics, denoted by Ve (M), and compare this to their utility when they are in control, Ve (E). [Hint: see Section 23.2 in the next chapter and Exercise 23.2].