Question the intertemporal budget constraint with three, Ask an Expert

Economics

Question: The intertemporal budget constraint with three periods: Consider an economy that exists for three periods: period 1, period 2, and period 3. In each period, the government must satisfy the budget constraint Bt+1 = (1+i)Bt + Gt - T+ .

(a) Write this budget constraint for each period.

(b) What must be true about B4?

(c) Using the result from part (b), solve the period 3 budget constraint for B3, and substitute this back into the period 2 budget constraint.

(d) Solve this new version of the period 2 budget constraint for B2, and substitute the result back into the period 1 budget constraint.

(e) At this point, you should have the intertemporal budget constraint for the three-period economy. Interpret this equation.

View complete question

Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M93106855

Have any Question?Write your Review or question?

Related Questions in Microeconomics

Question under what circumstances is it necessary and

Question: Under what circumstances is it necessary and desirable to monetize invaluable environmental amenities. How might this further environmental conservation efforts. The response must be typed, single spaced, must ...

Question some fields have large enough quantities of both

Question: Some fields have large enough quantities of both oil and natural gas that coordination must be achieved for the production of both, rather than oil alone as in our examples. Will fields with both oil and gas ha ...

Question mr paul is consuming products x and y optimally

Question: Mr. Paul is consuming products X and Y optimally and deriving total utility of 10 utiles. when his budget is increased from K80 to k81, his utility increases from 10 utiles to 10.1 utiles. a) what is the margin ...

Question in emerging markets such as india consumers shop

Question: In emerging markets such as India, consumers shop far more frequently than in most Western countries, often daily. As a result, consumers there have many more chances to switch brands. What does this buying beh ...

Question economists say that there is a difference between

Question: Economists say that there is a difference between economic profit and accounting profit. What do you think that difference is? Begin by defining the concept of opportunity cost. The response must be typed, sing ...

Question - after reading business cycles by christina d

Question - After reading Business Cycles By Christina D. Romer, answer this: What were the causes of business cycles before 1914? What happened to Business Cycles between 1929 and 1948? What was the history of Business C ...

Question president trump has complained that the us trade

Question: President Trump has complained that the U.S. trade deficit is too large. Based on the uses-of-saving identity (S = 1 + NX), how could the U.S. trade deficit be reduced (what are the options)? Explain fully and ...

Question consider an economy described by the followingbull

Question: Consider an economy described by the following: • autonomous consumption=C (bar) = 2.25 trillion • autonomous investments=I (bar) = 1.3 trillion • government purchases=G = 3.6 trillion • taxes=T = 3 trillion • ...

Question what factors would you consider when determining

Question: What factors would you consider when determining whether an investment in sub-Saharan Africa would be profitable for your company? Would the same factors hold for South Africa? The response must be typed, singl ...

With reference to economic scholars and theories evaluate

With reference to economic scholars and theories, evaluate the various criteria of social welfare maximisation.

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Microeconomics Expert