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Real Business Cycle models account for business cycle fluctuations as efficient responses to real economic exogenous changes or shocks
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Consumption smoothing in RBC Model
I have the following inter temporal utility function:
$U(t)=(\frac{s(t)}{1-\sigma})(c_t/c_{t-1}^\gamma)^{(1-\sigma)} - \chi*h(t)$
where $h(t)$ is the hours worked.
I know that gamma is responsible …