Deduce optimal comsumption ratio depends on tax rate
2-priod model. household utility: U(C1,C2)=ln C1 + ln C2
C1+S1=Y1 period1
C2 = Y2+(1+i1)S1-T2 period2
T2=Ts(1+i1)S1
Derive the optimal comsumption ratio C2/C1 showing how it depends on the tax rate on savings. Nmaely what happens wht Ts increases.
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Deduce the optimal comsumption ratio C2/C1 showing how it depends on tax rate on savings. Namely what happens if Ts increases.
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