18th

18th

P1

max

t=0

{ct ,at+1 }1
t=0

u(ct )

s.t.

at+1 = (1 + r)(at + yt
r > 0,

ct )

2 (0, 1), a0

at

t yt
t

u
limc!0 u0 (c) = 1

ct

at+1

t=0

t=1

a1

(1 + r)(a0 + y0

c0 )

a2

(1 + r)(a1 + y1

c1 )

t=T

a1
T !1

lim

u(ct ) =
lim

c1t
1

!1

c1
1

>0
1

= log(c).

.
ct

ct

(1 + r)
"

c0 = A a0 +
A

c0 .

<1

1
X

B yt ,

t=0

P1

max 1

t=0

{ct ,it ,gt }t=0

u(ct )

s.t.

ct + it + gt f (kt
kt (1

ct

0, kt

)kt

1 , gt )

1 + it

0, it

k0 > 0 given
kt
fkk fgg

gt
f
fkg fkg > 0

fkk < 0 fgg < 0

c t , kt

gt
|k| < 1

P1

i=0

ki =

1
.
1 k

@g
@

@k
@

f (k, g, z) = zk g ,
0 < < 1,

0 < < 1,

+ < 1.
z

=1

=1

max1

{ct ,kt }t=0

E0

P1

t=0

log ct

ct + kt = zt kt
log zt = log zt

"t N (0,

+ "t

2
")

c t , kt

ct = Azt kt

kt = Bzt kt

zt

x
b = log (xt /
x)
A=
t

xt

) nytt

(1

= Et [

t+1 Rt+1 ]

yt = ezt kt 1 n1t
Wt
Pt

= NA1 t
t

yt = At kt

+ (1

ct + kt = yt + (1

max

ct ,nt ,kt

)nt
)kt

Et

1/

1
P

[ln (ct ) + (N
s.t.

kt 1

(at nt )

ln at = (1
1

["t ] = 0
N

nt )]

t=0

ct + kt =
Et

V ar ["t ] =

+ (1

) ln a
+ ln at
2

)kt

1 + "t

c t nt k t
0 nt N a t

yt

kt

Rt

(at nt )

yt
+1
kt 1

c n
k R

1
X
u (Ct )
t
t=0 (1 + )

>0
0

u (Ct ) = Ct

Ct2 > 0

Ct

Et [Ct+1 ]

u (C)
Yt = AKt + et

Kt+1 = Kt + Yt
A

A=
et = et

1<

<1

Ct

+ "t

"t

C t = + Kt + e t
Kt+1

Kt

et

Kt
"

et
Y K