Hello,
so I'm trying to replicate Trigari(2009) (Equilbrium unemployment, job flows and inflation dynamics) and the log linear system of equations given in the paper features a hybrid phillips curve type equation with a backward looking element ala Gali Gertler (1999). I'm trying to derive it but I get stuck. Does anynone know of literature where the derivation is more explicit?
In addition, I cannot get my head around the fact that habit formation in consumption does not change the form of the phillips curve. The stochastic discount factor(beta*u'_c(t+1)/u'_c(t)), which must be plugged in eventually, becomes a lot less trivial I think.
If this is not the right forum for such theoretical questions then please give me a tip as to where I could ask such things.
Much obliged