Consider the Overlapping Generations model with production studied in the chapter. Namely, Each generation has the same number of people. Preferences are ln（Cy）+ay [1-Hy] +ln (C old)+ aold [1-Hold]. Each agent is endowed with one unit of time in both the first period and second period of his life. Production is given by : Cˢ=Ahᵈ.
a. Normalize A=1 and calibrate the value of αy so that in the equilibrium with the pay as you go system young people work .25. (This is the second row in the Summary and Conclusion Table).
