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Log-linearizing a second order term around the steady-state

If $\Pi_t$ is gross inflation then indeed $(\Pi_t-1)^2$ is a second-order term and is approximately zero. For example, for a reasonable quarterly steady state gross inflation rate of 1.005, the term ...
BrsG's user avatar
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What rules apply integrals over a continuum of agents in a symmetric equilibrium?

As I've written in the edit I believe this equality does indeed hold. We can think of x as a function of i. In a symmetric steady-state the function $x(i)$ is simply the constant function which ...
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The Canonical New-Keynesian Model

I would recommend first to check Sims' class notes in Graduate Macro Theory. I think it is both very gentle and straightforward introduction to this kind of models. In these notes he derives the model ...
manifold's user avatar
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