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Consider an economy where the population at time t is Nt = 1.05Nt−1 and the endowment...

Consider an economy where the population at time t is Nt = 1.05Nt−1 and the endowment per young person at time t is yt = 1.1yt−1. Old people do not receive an endowment. Assume that young people’s preferences are such that they want to consume 75% of their endowment when young, i.e., c1 = .75yt . Compute the rate at which transfers by the young people can be converted into transfers received when old, i.e., the conversion rate for this economy.

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