What is the intertemporal budget constraint in this model

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1. What is the intertemporal budget constraint in this model? Explain why some terms have the slope of the budget constraint as a divisor?

2. What does the Ricardian equivalence theorem say? Assuming government borrow-ing is substituted for present-period taxes, what is the eject on current and future consumption and the real interest rate?

Reference no: EM13892129

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