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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

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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