Period 2 represents the long run. Consumers get a deterministic return on the asset that they own (y), repay their debt (bi,2RL2), realize banks profits (πi,2), and consume (ci,2). We now discuss the consumers’ and banks’ problems in turn.
Period 2 represents the long run. Consumers get a deterministic return on the asset that they own(y), repay their debt (bi,2RL2), realize banks profits (πi,2), and consume (ci,2). We now discuss the consumers’ and banks’ problems in turn.