Intertemporal budget constraint

[Ema]

Hi, I was wondering how do you know when to use the present value budget constraint and the future value budget constraint? 

Also, during lecture i wrote down a budget constraint that is (1+r)c1 + (1+pi)c2 = (1+r)m1 +(1+pi)m2 , what is the difference between this budget constraint and the present and future budget constraint?

[Taylor Stoltzfus]

Hi Emma, 

This is the wrong Forum by the way. The Forum for this year is under the "Forum" tab. The present value budget constraint and future value budget constraint are the same for solving problems, it does not matter which one you use. The BC you have written up there is just a different version of the PV/FV budget constraint (you could transform either of them to get the one you wrote). I recommend you just pick one you are comfortable with and stick with it, since they are the same.

Best,

Taylor