Ferrero, Andrea (contributor); Gertler, Mark (contributor); … - 2008
preferences for the household in
period t are then given by
U
t
≡ E
t
∞
X
s=0
θ
t+s−1
u
t+s
, (5)
where the period utility u
t
is … fall below
marginal cost. For the fraction 1−ξ that are able to change price, the objective is given by:
E
t
∞
X
s=0
ξ
s
Λ … order condition for the optimal reset price P
o
kt
is given by
(21)
E
t
(
∞
X
s=0
ξ
s
Λ
t,t+s
[P
o
kt
−(1 +μ)MC
k,t+s
(f …