The Brock-Mirman Stochastic Growth Model
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چکیده
where our definition of Rt+1 helps clarify the relationship of this equation to the usual consumption Euler equation (and you should think about why this is the right definition of the interest factor in this model). Now we show that this FOC is satisfied by a rule that says Ct = γYt, where γ = 1 − αβ. To see this, note first that the proposed consumption rule implies that Kt+1 = (1− γ)Yt. The first order condition says
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