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RDP 2010-01: Reconciling Microeconomic and Macroeconomic Estimates of Price Stickiness
Equation
y
t
(
k
)
=
c
t
d
(
k
)
+
∫
0
1
m
i
,
t
d
(
k
)
d
k
=
1
γ
j
(
P
t
(
k
)
P
j
,
t
)
−
ε
c
j
,
t
s
+
∫
0
1
1
γ
j
(
P
t
(
k
)
P
j
,
t
)
−
ε
m
i
,
t
j
,
d
d
i
.
=
(
P
t
(
k
)
P
t
)
−
ε
c
t
+
(
P
t
(
k
)
P
j
,
t
)
−
ε
∫
0
1
m
i
,
t
d
d
i
y
j
,
t
=
∫
ψ
j
−
1
ψ
j
y
t
(
k
)
d
k
=
∫
ψ
j
−
1
ψ
j
(
P
t
(
k
)
P
t
)
−
ε
c
t
d
k
+
∫
ψ
j
−
1
ψ
j
(
P
t
(
k
)
P
j
,
t
)
−
ε
∫
0
1
m
i
,
t
d
d
i
d
k
=
γ
j
(
P
j
,
t
+
P
t
)
−
ε
c
t
+
γ
j
(
P
j
,
t
+
P
t
)
−
ε
∫
0
1
m
i
,
t
d
d
i
=
γ
j
(
P
j
,
t
+
P
t
)
−
ε
y
t
.
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