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The application of mathematical methods to represent theories and analyze problems in economics.

1 vote

Derivation of demand for intermediate goods in DSGE model

To solve the problem you also need the equation: $Y_t=\left(\int_0^1 Y_t(j)^{1-\nu} \ dj \right)^{\frac{1}{1-\nu}}$ Now, the FOC is the same for every $Y_t(j)$, so we only have to differentiate once …
Chris tie's user avatar
  • 880
4 votes
Accepted

What Taylor approximation is used in this equation?

Even though your question does not allow a definite answer, I am pretty sure the author used a Taylor expansion around the logarithm of both sides of the equation. This process is called log-lineariza …
Chris tie's user avatar
  • 880
1 vote
Accepted

Log linearising (Gali textbook)

We can easily switch between logged equations and log-deviations. To see this, note that a given equation always holds, and therefore it also holds in steady state. Hence, you can just subtract the …
Chris tie's user avatar
  • 880