Take the model of intertemporal consumer choice. A consumer's income in the current period is 179, and income in the future period is 178. He or she pays lump-sum taxes t = 17 in the current period and t' = 32 in the future period. The real interest rate is 4 % per period. Current and future consumptions are perfect complements for the consumer and s/he always wants to have equal consumption in the current and future periods. Calculate optimal saving of the representative consumer. (It might be a negative number.)

Take the model of intertemporal consumer choice. A consumer's income in the current period is 179, and income in the future period is 178. He or she pays lump-sum taxes t = 17 in the current period and t' = 32 in the future period. The real interest rate is 4 % per period. Current and future consumptions are perfect complements for the consumer and s/he always wants to have equal consumption in the current and future periods. Calculate optimal saving of the representative consumer. (It might be a negative number.)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.3P

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