Euler Equation
We consider the following basic maximization problem:
subject to 
where 
. The corresponding Bellman equation is
where 
as in 0623.
Euler equation we got in 0623 is
or
It leads to
when 
. In terms of k’s,
Thus
We consider the following basic maximization problem:
subject to
where . The corresponding Bellman equation is
where
as in 0623.
Euler equation we got in 0623 is
or
It leads to
when . In terms of k’s,
Thus