Hi I am wondering if everything have to grow at the same speed in mod file?
I have a new keynesian model in which the tfp is growing at mu
I stationarize everything by dividing with TFP. Since output is also growing at mu, output/tfp is a stationary variable. The euler equation basically pins down the interest rate.
I have a problem though with price, in this setup, price is growing at a rate of inflation, which is implied by taylor rule, so price is growing at constant+0.7mu.
How should I deal with this? Can I stationarize price by dividing with TFP also?