I am interesting in proving that the elasticity of substitution between leisure in two periods is equal to one for the following utility function: $$U = \ln(c_1)+b\ln(1−l_1)+e^{−\rho}[\ln(c_2)+b\ln(1−l_2)]$$ where $\rho$ is the discount factor. How would I go about doing this?

  • 2
    $\begingroup$ What is the utility function? This depends critically upon that. $\endgroup$
    – Brennan
    Commented Apr 27 at 19:36
  • $\begingroup$ U=ln(c1)+bln(1−l1)+e−ρ[ln(c2)+bln(1−l2)], where ρ is a discount rate $\endgroup$ Commented Apr 27 at 21:14
  • $\begingroup$ please note that e to the power negative raw is the discount factor $\endgroup$ Commented Apr 27 at 21:16


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