Sektor producentów pośrednich w empirycznym modelu równowagi ogólnej
The Producers of Intermediate Goods in the Empirical General Equilibrium Model

Summary/Abstract: The paper is the second of three on methods for building the Dynamic General Equilibrium model. The presentation includes details of microeconomic optimisation problems for intermediate goods producers that play a key role in the process of the inflation dynamic. Profit maximisation behaviour at the microeconomic level is included in the inertial mechanism that allows macroeconomic persistence to be achieved. The mechanism restricts the frequency of intermediate goods price decisions and, as a consequence, the model is able to mimic observed inflation inertia. The final part of the paper sums up the structural equations of the model and stochastic processes which govern the time path of the variables. The key equation in the model, which is obtained on the basis of the production sector, is called the New-Keynesian Phillips curve and defines the relationship between aggregated output and the interest rate and inflation.

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