What is the impact of the government transfer on the agent

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Question: Suppose that the government arranges a transfer v to this agent by issuing bonds. In the future, the government will tax the agent to be able to buy back the bonds. The new constraints of the agent are: c1 + s1 = 1 2 y + v, c2 = y + (1 + r)s1 - (1 + r)v, s1 ≥ 0. What is the impact of the government transfer on the agent's optimal consumption in the first period?

Reference no: EM133598696

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