2. Consider the Overlapping Generations model with production studied class. Namely, each generation has the same number of people. Preferences are In(c,) + a, [1-h,]+ln(Cold) + αold [1-hold]. Each agent is endowed with one unit of time in both the first period and second period of his life. Production is given by: c³ = Ahª. a. Normalize A=1 and calibrate the value of ay so that in the equilibrium with the pay as you go system young people work.25. (This is the second row in the Summary and Conclusion Table). b. Suppose αold = 2 ay. Verify that people are better off in the pay as you go system compared to autarky? c. By how much do you have to scale up cy and cold in the case of no government policy so that people have the same utility as in the pay as you go equilibrium.
2. Consider the Overlapping Generations model with production studied class. Namely, each generation has the same number of people. Preferences are In(c,) + a, [1-h,]+ln(Cold) + αold [1-hold]. Each agent is endowed with one unit of time in both the first period and second period of his life. Production is given by: c³ = Ahª. a. Normalize A=1 and calibrate the value of ay so that in the equilibrium with the pay as you go system young people work.25. (This is the second row in the Summary and Conclusion Table). b. Suppose αold = 2 ay. Verify that people are better off in the pay as you go system compared to autarky? c. By how much do you have to scale up cy and cold in the case of no government policy so that people have the same utility as in the pay as you go equilibrium.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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![2. Consider the Overlapping Generations model with production studied class. Namely,
each generation has the same number of people. Preferences are
In(c)+a, [1-h,]+ln(Cold)+αold [1-hold]. Each agent is endowed with one unit of time
in both the first period and second period of his life. Production is given by: c³ = Ahª.
a. Normalize A=1 and calibrate the value of ay so that in the equilibrium with the
pay as you go system young people work .25. (This is the second row in the Summary
and Conclusion Table).
b. Suppose dold=2 αy. Verify that people are better off in the pay as you go
system compared to autarky?
c. By how much do you have to scale up cy and cold in the case of no government
policy so that people have the same utility as in the pay as you go equilibrium.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc1e78592-0bf4-4b47-9b18-d7a6fa476d06%2F2684fc5f-9fe2-4bf6-8e10-3787787ddc94%2Fnvmq4ac_processed.png&w=3840&q=75)
Transcribed Image Text:2. Consider the Overlapping Generations model with production studied class. Namely,
each generation has the same number of people. Preferences are
In(c)+a, [1-h,]+ln(Cold)+αold [1-hold]. Each agent is endowed with one unit of time
in both the first period and second period of his life. Production is given by: c³ = Ahª.
a. Normalize A=1 and calibrate the value of ay so that in the equilibrium with the
pay as you go system young people work .25. (This is the second row in the Summary
and Conclusion Table).
b. Suppose dold=2 αy. Verify that people are better off in the pay as you go
system compared to autarky?
c. By how much do you have to scale up cy and cold in the case of no government
policy so that people have the same utility as in the pay as you go equilibrium.
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