The current account is exogenous

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Question

Consider the model we learned in class, in which tradables are endowed and the current account is exogenous: cT = yT - x, and non-tradables are produced linearly with labor, cN T = yN T = ALN T . Because of this, ApN T = w. Agents have utility log cT log cN T , and face the budget constraint ecT pN T cN T = wL e(yT - x).

Reference no: EM134033585

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