where does this belong? + putty-putty capital + putty-clay capital
cambridge capital debate
Households have portfolios.
Includes cash, bonds, stocks
so what is value of current assets? We can plug this into the intertemporal choice constraint.
income at t is:
\(y_t=w_tl_t+A_t+()k_{t-1}+div_t\)
Where:
ul
li \(w_tl_t\) is wage income
li \(A_t\) is state contingent bond income
li \((r_tz_t-\Phi (z_t))k_{t-1}\) is the return on capital stock
li \(div_t\) is dividends at time \(t\)
We have \(k_t\), capital it time \(t\).
What are the dynamics?
\(k_{t+1}=y(k_t)-c_t+(1-\delta )k_t\)
So capital is capital from before, depreciated, and the difference between output and consumption.
\(u'(c_t)=\beta (1-\delta +f'(k_{t+1})u'(c+_{t+1}\)
+ Alternatives for uncertainty * prospect, bounded etc. should also be in AI.