... Welfare Effects of Financial Innovation and Financial Deregulation Have financial innovation and financial deregulation make lower ? As in the previous section, this question is examined trough ... as constrained nonlinear optimization and, given an initial allocation for endogenous variables, it consists on minimizing an objective function subject to a system of nonlinear restrictions ... the same consumption pattern is in Grossman (1985, appendix B). Página 21 de 45 conditions for goods implies that the sum of aggregate private consumption, public consumption, financial...