Solving Theory of a 2-Period Consumption Model w/ Different Interest Rates for Borrowing and Saving

[@zethayn]

You're saving lives! Thank you!

[@mellamokatieq]

Thank you for saving me for my final!!!

[@inocentlema5574]

could you please work out some numerical examples? majorities end up to derive only formula and define intuitions. Please do it if you can, you will save a lot of people. thank you

[@thapeloemamanuel7217]

nice work James a beautiful explanation indeed

[@TheKeyToMusic]

Really great explanation. What is the equation of that final inter-temporal budget constraint though?

[@kelvo30]

you just saved my ass for this midterm

[@micahsnow346]

Hi there, thank you so much for your videos! I know you posted these a long time ago but I had a quick question: you have solved all of these problems with the assumption that the consumer is choosing to perfectly smooth consumption. In my Intermediate Macro class, my professor has us substitute the intertemporal consumption restraint into the utility function of the individual (ie: max u = u(c) + Bu(cf) ). In this case, B represents the discount rate that is particular to the individual (ie: how much does this particular individual value consumption today vs. consumption in the future). We then solve to optimize consumption in both periods by finding the tangency point between the utility function and the consumption restraint. In this case, the utility of present consumption vs. future consumption depends on the ratio of B(1+r) (B(1+r) = u'(c)/u'(cf)). Could you possibly make a video with examples like this? thanks!

[@zicaa911]

thanx mate

[@johnnykleytonful]

How would it be with n periods?

[@phdZines]

It depends if you are looking at discrete intervals such as in the example above - here, the discount value would be (1+r)^t for period t. If you are looking at non-discrete intervals, you would need to formulate the problem as integral and solve it via Hamiltonian optimization.

[@micpanit]

Thank you so much

[@kyereen835]

how do you find the intersection point (Y2 & Y1)?

[@MoyoSore]

Thank you :)

[@kylerobbins5099]

I found this video for CED 201, even though im currently in your 104 class

[@iyanuoladeji7201]

what is rb