1. Set up the Neoclassical growth model with: a. full depreciation (=1) b. two periods...
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1. Set up the Neoclassical growth model with: a. full depreciation (=1) b. two periods (t=1,2) c. TFP can be AH or AL each period with probability H and 1H d. Leisure not in the utility function - Make sure to draw the uncertainty tree and clearly denote capital for each state on the tree 2. Set up the Lagrangian and derive the usual conditions (MRS=MRT) 1. Set up the Neoclassical growth model with: a. full depreciation (=1) b. two periods (t=1,2) c. TFP can be AH or AL each period with probability H and 1H d. Leisure not in the utility function - Make sure to draw the uncertainty tree and clearly denote capital for each state on the tree 2. Set up the Lagrangian and derive the usual conditions (MRS=MRT)
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