Gnocchi, Stefano (contributor) - 2006
Price Equilibrium
It is convenient to rewrite allocations in a compact form. Let x
t
= (Y
t
,Π
t
,∆
t
)
and X
t
= (F
t
,K
t … expectation equilibrium
for the sticky price economy is a process {x
t
,X
t
}
∞
t=0
that satisfies the following
system of …
pi
t
= f
pi,a
a
t
+f
pi,u
µ
w
t
(52)
ˆx
t
= f
x,a
a
t
+f
x,u
µ
w
t
(53)
where f
pi,a
, f
pi,u
, f
x,a
and f
x,u
are a …