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Model (Production (Incumbant Wholesalers (y_x, y_d), Retailers (Wholesale…
Model
Production
Incumbant Wholesalers
y_x
y_d
Retailers
Wholesale Y_d,t with phi
y_d,t(omega) with theta
Wholesale Y*_x,t with phi
y*_x,t(omega) with theta
Number of firms and product entry
Monetary policy:
Interest rate
GAPS
INFLATION GAP
NATURAL RATE
OUTPUT GAP
INTEREST RATE YTD
Household
C^H
1 * C (ARMINGTON)
https://en.wikipedia.org/wiki/Armington_elasticity
C_D
C*_X
w_u * (1-L) (TOTAL WAGE)
Intermediate
Determine wages
Household budget constraint
Symmetric Equilibrium
Welfare-consistent versis data-consistent