Elements of Numerical Mathematical Economics with Excel

10.5. Consumption model

Let us see now some economic models applied with the OC theory starting with a simple consumption model. ⁶

Figure 10.4-3 Solver parameters setting λ(T)   =   0 by changing λ(0).

The consumption model is expressed as follows:

max { u } J ( u ) = ∫ 0 1 log ( u 4 y ) d t

s . t . y ˙ = 4 y ( 1 − u ) and y ( 0 ) = 1 , y ( 1 ) = e 2

where u(