Consider again the basic RBC model, but now allow for government spending shocks as a source of uctuations. The representative household maximizes: no cl-y E 3-1' 5 , 3;: 1-? where 0 0, subject to the constraint: C, +I,+X, =FfK, +w, in each period. In this constraint, X is exogenous lump-sum taxation, which we assume is equal to government spending. The rest of the notation is as in the slides. The law of motion for capital is: Kn] = (1 )K: + I: in each period. The production function is: r, =A,"K,\"\