Question

Features of Ramsey model for decentralized households

Answer 1

The main point about the Ramsey model is that it's a Presbyterian theory, not a prognostic one. In principle, such a model is designed for a closed economy. The only agents to which they belong are households and firms.The representative farm provides works to the firm, and also is a shareholder of the firm.
There are two key equations of Ramsey's model.
1. The first is the law of motion for the accumulation of capital.
2. The second equation concerns the preservation of household behavior and less intuitive.