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 | | (Since an \ arbitrary differentiable function can be approximated by its polynomial \ Taylor's Series, it is easy to test this just by introducing a cubic or \ quartic term in the utility function.) \nFurthermore, certainty equivalence \ does not work for a multiplicative shock to productivity of capital. |
 | | As we have seen in the example in the last section, this is convenient \ to express target levels of consumption, and in the current very general \ formulation, to allow for changes over time in the target levels of \ consumption, which we called ", Cell[BoxData[ \(TraditionalForm\`c\&_\)]], ". |
 | | For example, arbitrary time patterns of \ production and depreciation can in principle be incorporated into this type \ of model by expanding the state space to include machines of different ages. |
| homepage.newschool.edu /~foleyd/GECO6289/linquadreg.nb (1519 words) |
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