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What does "competing forces in the economy" mean? That is not a precise economic jargon just a general statement. By reading the context of the passage Christiano et al (2017) just generally describes the fact that economy is full of trade-offs. Workers that can be used to build cars can be used to build boats. Worker cannot simultaneously at the ...


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DSGE models are derived from dynamic (i.e. intertemporal) optimisation problems where households and firms maximise utility/profit. The first order conditions are simplified/combined to form a general equilibrium and then linearised around the steady state using the first-order Taylor approximation. These are then simplified to get a system of difference ...


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As DoubleBass says basic New-Keysian model with fully flexible prices is RBC model, I'd just add that if you have already the set-up of Calvo and want to convert it to fully flexible prices you need to set the share of firms that cannot change prices to zero (i.e. if $\lambda$ is the share of firms that cannot change their prices in $t$ then set it to zero). ...


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