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1. Consider an overlapping generation model where housing is the only asset Representative agent born in t solves the following optimization problem subject to his budget constraint max logct

 Consider an overlapping generation model where housing is the only asset Representative agent born in t solves the following optimization problem subject to his budget
constraint
max logct loght
st ptht  wt
ptht d ct
where ht denotes the housing service that agents buy in period t pt and pt represent
the price for  unit of housing service in t and t  respectively wt
is the labor income
agent receives in t youth he does not receive any labor income in t old
 Solve representative agents optimization problem Derive housing price pt as a function of pt

Jan 30 2020 View more View Less

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