2 How does the level of public debt decided by agovernment who aims to achieve the planners'optimal is affected by different values of o?Show the mathematical condition and provideeconomic intuition.

*Answer: Rate of discounting utility = σ So the total utility level given infinite time horizon = U…

Answered: How does the level of public debt…

How does the level of public debt decided by government who aims to achieve the planner optimal is affected by different values of o? Show the mathematical condition and provid economic intuition.

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter16: Budget Deficits In The Short And Long Run

Section: Chapter Questions

Problem 1DQ

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How does the level of public debt decided by a
government who aims to achieve the planners'
optimal is affected by different values of o?
Show the mathematical condition and provide
economic intuition.

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