I am trying to understand the R&D model and how to calculate the growth rate of wage in this model.
There is no equation given, but it’s stated that : household income must equal total consumption. as income is total profit plus wage income, and the two are fixed in proportions, wages grow at the same rate as output $g_w=g_y$
I tried to write down the equation of this statement, however, I don‘t really think it’s right: $\pi+w= C_t$.
Can anyone help with the equation and it’s intuition?
Addition: the R&D model introduces final good producers that sell their good in a competitive market and intermediate goods producers that produce either a produced intermediate good or “ideas” that are sold to the final good producers and used to produce the final good. The intermediate good and “ideas” are substitutes.