3
votes
Accepted
Log-Linearization in Calvo Pricing
There is a typo in your (B.2.4). I believe the right-hand side should include a $P_{T,t-1}^H$ term. That is, it should be $P_{T,t}^H=\left[\theta_T (P_{T,t-1})^{1-\varepsilon}+(1-\theta_T)(\bar{P}_{T,...
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Resources for a Deep Dive into the New Keynesian / DSGE models
Wickens Macroeconomic Theory: A Dynamic General Equilibrium Approach, is good resource that has what you are looking for.
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New Keynesian DSGE - Dynare
Indeed, you can directly code the non-linear necessary equilibrium conditions into Dynare and it'll perform the necessary linearizations for you in order to solve the model locally with perturbation ...
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Gopinath et al (2019)
Demonstration
Static lagrangian
$$\max_{C_{j,t}C_{ij,t}}C_{j,t} $$
$$s.t. \sum_{i}\frac{1}{|\Omega_i|}\int_{\omega\in\Omega} \gamma_{ij}\Upsilon\Big(\frac{|\Omega_i|C_{ij,t}(\omega)}{\gamma_{ij}C_{j,...
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Derivation question: Gali (2015), chapter 5, equation 25
pls check the 1st edition of this textbook, which contains the constant term.
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