Hi. I have a question about the calibration. Thank you for guiding me
If the Phillips equation is as follows:
If we assume in steady state :
As a result :
Now if we consider that:
Can we do the calibration as below:
Hi. I have a question about the calibration. Thank you for guiding me
If the Phillips equation is as follows:
If we assume in steady state :
As a result :
Now if we consider that:
Can we do the calibration as below:
That depends on whether you assume full indexing or not. Your original PC essentially assumes a 0 inflation steady state. Usually, the terms are rather (\Pi_t-\bar \Pi)