I’m a Ph.D student and I have to replicate the Smets and Wouters DSGE model but I’m encountering difficulties.
First of all, in their article they indicate with gama_bar as “the common quarterly trend growth rate to real GDP, consumption, investment and wages”, but in the formula there is a gama-1.
What does that parameter refer to? Can someone help me?
I attach the image for greater clarity. Thank you so much for any information.