Homework Statement
Let's say u(ct) = logct
The first order conditions are:
ct: βt/ct-λt = 0 (t = 0, 1, 2, ...)
kt+1 = -λt + λt+1R = 0 (t = 0, 1, 2, ...)
Delete λt and λt+1 (Euler equation) and you get
1/ct = βR/ct+1
∴ct+1 = βRct
Homework Equations
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