ECON 451 Assignment 3
Due May 13th 2021
Please submit the assignment to Canvas
Instruction: Please solve following questions step by step and provide all of the derivations.
Otherwise, your assignment will be considered incomplete.
Question 1 Government budget (30 points)
Let’s consider the governments budget constraint (for time t) equates the total real expen-
diture to total real revenues, as follows
gt + bt1 = qbt + t; (1)
where gt is real government expenditure, q = 1
1+r , r is real interest rate, bt is real debt
holding, and t is real tax revenue. Assume the transversality condition
qtbt+1 = 0
prohibiting the government from always borrowing to pay its debt (at some point all gov-
ernment expenditures must be backed by government tax revenues.).
(a) Please solve forward equation (1) for government’s innite-horizon budget con-
straint [Hint: the initial budget constraint is equation (1)].
(b) Assuming that bt1 = 0. Please talk about the economics intuition of your answer
for (a) in terms of how government expenditure is nanced.
Question 2 The Ricardian Equivalence (75 points)
Let’s consider following representative consumer problem.
ct + qbt + t = bt1 (3)
(c) Please solve forward equation (3) for consumer’s innite-horizon budget constraint
[Hint: the initial consumer’s budget constraint is equation (3)].
(d) Let’s assume that bt1 = 0 as well. Please merge government’s innite-horizon
budget constraint in Question 1 (a) with consumer’s innite-horizon budget constraint
fPor a new budget constraint of consumer. (Hint: the new constraint should be 0 = 1
t=0 qt(ct + g):)
(e) Please talk about the economics intuition of your answer for (d) in terms of how
government expenditure aects consumer’s consumption.
(f) Please solve the representative consumer problem using the new budget constraint
that you get in (d) and nd the rst order condition with respect to ct. Note there is
only one budget constraint now.
(g) Assume (for simplicity) that = q. Please nd ct. Moreover, please show con-
sumption is constant over time and unaected by government taxes, t, used to nance
Question 3 Regime-switching model (45 points)
Please apply the regime-switching model or the VAR model for an economics question that is
interesting to you. Please talk about why the model is appropriate for your research question
and discuss your results.
Order any type of Service We Provide
We are the best assignment service that can satisfy student’s demands in different scientific fields. We perform tasks of any kind. Our specialists provide diverse custom assignment writing services to students from all over the world every day. You can contact us for assistance with:
The list is far from complete!
Representatives of our student assignment service are connoisseurs of the peculiarities of presentation in regards to academics. Your college assignment will never turn out an untoward surprise! Whether you need research for high school, an undergraduate program, or a Master’s or Doctoral degree, you will get exactly what you are looking for to sound smart and well-informed.
If you are pressed for time, request our experts!
We are your academic saver. It is a perfect solution for people who need academic help but has no professionals nearby to provide it. Just redirect your home tasks to us and forget about any educational issues. With us, you will get 100% plagiarism-free content delivered on time by an experienced specialist in a particular field.
Main Advantages of Collaboration with Us
When you order professional assignments here, you will get:
Original custom papers. We value your academic reputation. Just as well, we value the years of thorough work on our reputation for reliability and never compromise the originality of delivered papers. We will never endanger both. Every custom assignment is written from zero – the only possible first stage of work on the order is research. We apply the latest plagiary checking tools on the final stage, so plagiarism has no chance to emerge in your college assignment writing.
Control over the order completion. To make the process of collaboration comfortable and efficient, we offer our clients to choose the writer themselves taking into account all the requirements and the budget. For you to save nerves, having entrusted your fateful task to some qualified “stranger”, we enable communication with the assigned writer in the process of order completion.
Affordable assistance. We are eager to contribute to the academic achievements of students in need of help with college assignments. We are eager to help you start investing in your career growth today. That is why our service is so affordable. We don’t charge to pay for the latest marketing tricks or advertisements – we choose the best experts in the labor market who write great custom papers in any area, level of complexity, and time frame. Our client’s grateful feedback is a top advertising trick.
On-time delivery. The quality of a paper is only valued when it is delivered within the determined time frame – you will get your custom assignment writing service in time and have a couple of days to revise it and ask for changes in case they are needed. And you will still have time to learn the material.
Protection. We value your trust and take all measures needed to keep your private and banking details safe. We offer only well-tested payment methods. Due to the system of encryption and protected servers, no third party can have access to your data.
Custom support 24/7. We do our best to make the process of collaboration comfortable for the customer. Our “write my assignment” help is always here for you to provide a solution to your problems, give you a prompt answer to any question, and offer clarification as to any issue related to the services. Feel free to contact us anytime!
If you feel that your dissatisfaction with student life is growing every day and you just feel exhausted, don’t hesitate to change the situation for the better today. Order your first assignment from reliable custom assignment services today to evaluate the advantages.
Having seen the difference once, you won’t want to go back to your previous lifestyle. You deserve to find fulfilment in other spheres of your life, have hobbies, spend time with close people but continue making progress. It is possible when you have a professional helper. Don’t put off your life for someday after graduation!
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more