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1-o Consider the two period consumption smoothing behavior. U (c) = interest R, income stream y1, Y2· ß = 1/3 with || 1-0 ) • Find the consumption and saving of the agent in period 1. • Let's consider ơ = 2, y1 = 100 Now consider there are some randomness in y2, particularly, with 50%, Y2 is 25; with 50% y2 is 125. R the conditions required to calculate the consumption in the first period. (hint: Euler equation holds in expectation). Note if you want to fully solve the problem you may need to write a code. 0.05. List

1-o Consider the two period consumption smoothing behavior. U (c) = interest R, income stream y1, Y2· ß = 1/3 with || 1-0 ) • Find the consumption and saving of the agent in period 1. • Let's consider ơ = 2, y1 = 100 Now consider there are some randomness in y2, particularly, with 50%, Y2 is 25; with 50% y2 is 125. R the conditions required to calculate the consumption in the first period. (hint: Euler equation holds in expectation). Note if you want to fully solve the problem you may need to write a code. 0.05. List

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Consider the two period consumption smoothing behavior. U(c) = , with interest R, income stream y1, Y2. B = 1/3 1-0 ) • Find the consumption and saving of the agent in period 1. • Let's consider o = 2, y1 = 100 Now consider there are some randomness in y2, particularly, with 50%, y2 is 25; with 50% y2 is 125. R = 0.05. List the conditions required to calculate the consumption in the first period. (hint: Euler equation holds in expectation). Note if you want to fully solve the problem you may need to write a code.
Transcribed Image Text:Consider the two period consumption smoothing behavior. U(c) = , with interest R, income stream y1, Y2. B = 1/3 1-0 ) • Find the consumption and saving of the agent in period 1. • Let's consider o = 2, y1 = 100 Now consider there are some randomness in y2, particularly, with 50%, y2 is 25; with 50% y2 is 125. R = 0.05. List the conditions required to calculate the consumption in the first period. (hint: Euler equation holds in expectation). Note if you want to fully solve the problem you may need to write a code.
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