It doesn't matter too much (you could also write this term as 'S' for saving). However, I think of this term as "bonds maturing in period 2", so it is a B subscripted with the number 2. As long as your notation is consistent and you explain what your terms mean, you can write this however you like (and however makes the most sense to you).
what would you do when theres a transaction cost involved so say there is a fixed transaction fee of 50 with U=C1C2^0.85 and the interest rate being 0.08 as well as Y1 = 2000 and Y2 = 2200
Hi. This is not the case. The intertemporal budget constraint looks as shown in the video whether we save or borrow. I tried to give some intuition as to why this is the case when explaining the period 1 and period 2 constraints near the start of the video - it doesn't matter if our "B2" term is positive or negative, we still get the same constraint
@@EverythingEcon mate I'm struggling with a question related to this. I could use some help! Is there any way I can contact you? My mail is 'athreyakb' @ Gmail
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I was looking for an explanation just like this. Thanks
Thank you for explaining it in simple terms
Very nice explanation
Why did you have to divide the substituted expression through by the (1+r)?
Why isn’t the second budget constraint equation: Y_2 = C_2 + B_2(1+r)
thanks so much!
Why is the subscript of B 2 at BC1? Isnt it supposed to be 1 since you're borrowing at time 1? Thanks for your answer!
It doesn't matter too much (you could also write this term as 'S' for saving). However, I think of this term as "bonds maturing in period 2", so it is a B subscripted with the number 2.
As long as your notation is consistent and you explain what your terms mean, you can write this however you like (and however makes the most sense to you).
@@EverythingEcon Thank you so much!
what would you do when theres a transaction cost involved so say there is a fixed transaction fee of 50 with U=C1C2^0.85 and the interest rate being 0.08 as well as Y1 = 2000 and Y2 = 2200
how would you answer a question that says, what is the total income in terms of period 1 consumption?
what if utility consumption is T periods with w_t ≥ 0 for all t?
Hey if we were borrowing instead of saving in period 1, would the intertemporal budget constraint then be Y2/1-r instead of 1+r?
Hi. This is not the case. The intertemporal budget constraint looks as shown in the video whether we save or borrow.
I tried to give some intuition as to why this is the case when explaining the period 1 and period 2 constraints near the start of the video - it doesn't matter if our "B2" term is positive or negative, we still get the same constraint
@@EverythingEcon thank you so much for the quick reply. Liked and subscribed :)
@@EverythingEcon mate I'm struggling with a question related to this. I could use some help! Is there any way I can contact you? My mail is 'athreyakb' @ Gmail