題組內容

4. The Trump administration has recently signed a tax overhaul bill into law. The tax law is estimated to reduce the government's revenue by 1.5 trillion over the next decade, which would be the largest tax cut for Americans since 1986.

(2) Based on the Ricardian equivalence proposition, how would the tax cut affect the consumer's welfare and their intertemporal consumption choices in the long run? Set up a two-period consumption-saving model to explain the idea. (10%)