4. More on the Intertemporal Elasticity of Substitution. Suppose that the individual’a lifetime utility is given by: u = u(c) + 515(6) where again

can you please solve this. it is for intermediate macroeconomics

I tried solving it but couldn’t t solve it .

4. More on the Intertemporal Elasticity of Substitution. Suppose that the individual’a lifetime utilityis given by:u = u(c) + 515(6)where again the utility from consumption in a. given period is given by 4214-1a“): 1-0- The intertemporal budget oonstraint is given by f I C _ y1+r_y+1+r’ (a) What is implicitly being assumed, in the intertemporal budget constraint, about opportunities to borrowand save? (b) Derive the consumption Euler Equation. (G) Take natural logs of both sides of the Euler equation. Use (i) the approximation ln(1 + :r} H 2:, and (ii)the fact that fl = 1/(1+p), to derive the relationship between the growth rate of consumption (lnc’ wine)and the parameters 7′, p and o. (:1) Explain, based on your derivation, the role that 0′ plays in determining the consumption growth rateand provide the intuition. C+

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