The Euler equation is:
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.