Question: Please help me find the solution to the following question. 3. [6] Consider a twoconsumer, twoperiod economy. Consumers can buy and sell claims on consumption

 Please help me find the solution to the following question. 3.

Please help me find the solution to the following question.

[6] Consider a twoconsumer, twoperiod economy. Consumers can buy and sell claims

3. [6] Consider a twoconsumer, twoperiod economy. Consumers can buy and sell claims on consumption 33%- in period 2' : 1,2 at unit price pi. Each consumer owns 1 unit of the consumption good in both periods. The utility of consumer A from consumption path (rf'gc) is In will +lnz1:1, and the utility of consumer B from consumption path (3:33:23) is (l ,8) ln $113 + ln 3323, Where 0 S ,8 S 1. Notice that consumer A does not discount future consumption, Whereas consumer B can either have a preference for current or future consumption (depending on Whether 3 1/2 or 2 1/2, respectively). (a) [2] Derive a competitive equilibrium for this economy. (b) [2] Illustrate the equilibrium from (a) in an Edgeworth box for the case in which 3 = 1. (c) [2] As a function of , What is the real interest rate in this economy? Show that the real interest rate in this economy can be negative. Interpret your

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