General Equilibrium of Steady States
So far we have not introduced any consideration which would allow us to decide which point on the wage interest curve is being chosen by any given economy growing in a steady state. To solve this open problem we have to introduce the households in the economy and their intertemporal decisions. We first consider a single household whose lifetime extends from some periode to to some period to+λ. We assume perfect certainty and we assume that the wealth of the household is zero at to as well as to+λ.
KeywordsInterest Rate Wage Rate Excess Demand Consumption Good Bond Market
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