Question Gili (2008) chapter2.mod

Dynare help (legacy posts)
1

Dear Prof. Johann,

I am a newbie in DSGE modelling. I read the model Chapter2.mod from JohannesPfeifer/DSGE_mod (Github) but I do not understand where the equation come from?

//6. Monetary Policy Rule, eq. (22)
R=1/betta*Pi^phi_pi+eps_m;

Could you please explain to me? Because I read eq.22 in Gali book, I do not know where Betta come from!

2

As it says in the header of my file

The equation you refer to is the linearized one where the steady state drops out. In steady state, the implemented equation just tells you that

R_ss=1/betta
3

Thank you Prof. Johann but I am actually not so clear with the ideal.

Best!