Rotemberg Resource Constraint

General DSGE Modeling
1

Hello everyone,
I am a Phd student, not very familiar with DSGE frameworks.
My question is about the derivation ofthe aggregate resource constraint in the Rotemberg pricing setup.

I tried to derive it starting from the household budget constraint, but I am not really totally convinced this is the right procedure.

Thank you very much!

2

That should work. The price adjustment costs are bourne by firms, so they will enter the household budget constraint via firm dividends/profits.

3

Got it! Thank you very much!