Find the government budget constraint

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Assume that people face a lumpsum tax of t goods when old and a rate of expansion of the fiat money supply of z = 1.2. The tan-c and the expansion of the fiat money stock are used to finance g = ('3th goods per young person in every period. There are 100 people in every generation (population is constant].

a. Find the Lifetime Budget Constraint using individual's budget constraints when you and old.

b. Find the Government Budget constraint.

c. Find the Feasible Set.

d. Use the stationary monetary equilibrium to find the real rate of return on money.

Reference no: EM133083437

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