RDP 2016-08: The Slowdown in US Productivity Growth: Breaks and Beliefs Appendix B: Model Equations

This section documents the log-linearised model equations. The full nonlinear model is described in Justiniano et al (2013).

Production function

Cost minimisation

Phillips curve

Marginal costs

Consumption

Capital utilisation

Value of capital

Investment Euler equation

Capital used in production

Capital accumulation

Aggregate resource constraint

Wage gap

Wage Phillips curve

Taylor rule

GDP

Technology

Exogenous spending

Labour supply

Wage mark-up

Investment-specific TFP shock

Price mark-up shock

Intertemporal shock

Inflation target shock

Year-ended inflation

Measurement equations