[3] Consider a two-consumer, infinite horizon economy. Consumers can buy and sell claims on consumption x;...

 

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[3] Consider a two-consumer, infinite horizon economy. Consumers can buy and sell claims on consumption x; in period i = 1,2, 3, ... at unit price pi. Consumer J units of the consumption good in period i A, B owns w; 1, 2, 3, .., and her utility from consumption path (x{, x3, x{,..) is Bi-lu" (x{_1) = u' (x{) + Bu' (x³) + B²u' (xz) + .. , i=1 where 0 <B 1 is consumers' discount factor. Define a competitive equilibrium for this economy. 8WI [3] Consider a two-consumer, infinite horizon economy. Consumers can buy and sell claims on consumption x; in period i = 1,2, 3, ... at unit price pi. Consumer J units of the consumption good in period i A, B owns w; 1, 2, 3, .., and her utility from consumption path (x{, x3, x{,..) is Bi-lu" (x{_1) = u' (x{) + Bu' (x³) + B²u' (xz) + .. , i=1 where 0 <B 1 is consumers' discount factor. Define a competitive equilibrium for this economy. 8WI

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Ans Fom the given data We have 1 23 Psice P J AB owns Hi ... View the full answer