4

Because you are talking about constraints, it appears you do not consider the case of inserting such "access costs" (because this is what they are) in the utility function. It implies that they do not create disutility directly, only direct or indirect monetary costs. Let $d$ be the distance in some units. Let $C_d = c_dd$ be a linear (for ...


3

The interest component is already included. It was just their way of writing out the budget constraint that confused me. If anyone is interested: $\frac{B_{t-1}}{p_{t}} - \frac{B_{t}}{(1+i_{t})p_{t}} = \frac{i_{t}}{(1+i_{t})}\frac{B_{t}}{p_{t}} - \frac{B_{t}}{p_{t}} + \frac{B_{t-1}}{p_{t}}$. This is simply the interest on existing debt and the face value of ...


3

This is more easily seen by writing out the budget constraints for periods 1 and 2 separately, and then eliminate the saving $s$. In period 1, the agent spends $\left(1+T_1^c \right)\cdot c_1$ on consumption, and saves the rest, so $$(1) \qquad \qquad s=y - \left(1+T_1^c \right)\cdot c_1.$$ In period 2, the agents lives on savings (together with interest ...


1

Consider an arbitrary pair of vectors $(L_{1},K_{1})$ and $(L_{2},K_{2})$ that satisfy $wL_{i} + rK_{i} \leq Q$ for $i = 1, 2$. To show that constraint set is convex, we need to show that any convex combination of that (arbitrary) pair of vectors lies in the constraint set. Namely, for all $\gamma \in [0,1]$ we have $$\begin{split} w\left(\gamma L_{1} + (1-...


1

I guess the discount holds for the 100 first units of food even if she buys more than 100. Therefore the new budget line is \begin{equation*} \left\{ \begin{array}{ll} & 200 = 0.2 F + 2C \text{ if } F < 100 \\ & 200 = 0.2 \times 100 + F-100+2C \text{ otherwise } \end{array} \right. \end{equation*} which is continuous.


1

This is a standard regression equation, in the context of an econometric approach. The authors postulate a theoretical relationship between the variable "Change in Cash Holdings", which is treated as the "dependent variable", while "Cash Flow" and the rest are the explanatory variables/regressors. The "factors in front of them" are the regression ...


1

I can think of at least one paper where binding accounting rules are shown to have negative consequences on real investment: Can Tight Accounting Oversight Distort Investment? Evidence from Mortgage Restructurings after the JOBS Act Abstract: I study the effect of accounting oversight on a bank’s level of troubled mortgage restructurings. If banks ...


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