Euler equation - Intuition behind setting $\beta(1+r)=1$ if the economy is closed

The Euler equation is:

$$u(C_{t})=\beta(1+r)U(C_{t+1})$$

In my lecture notes, I noted that my prof. said something like:

Since our economy is closed, we are going to assume that $\beta(1+r)=1$

What did he mean by this statement? I couldn't get it. Why would closed economy imply this condition. What would happen if $\beta(1+r)>1$ or $<1$?

I'm trying to understand the intuition behind it.

• My guess is he also said output is constant, so $Y_t = Y_{t+1}$. Then this would make sense. – Giskard Sep 29 '17 at 20:56
• @denesp I agree. Such case would ensure that the ratio $C/Y$ does not go to 0 or to 1. However, in principle there is no restriction on $\beta$, as far as I know. – luchonacho Sep 29 '17 at 20:58