In the Dynare DSGE User guide, Can anyone please explain to me, how the equation on marginal cost and the subsequent two equations on wage and rental rate of capital on page 14 has been derived. It is not very clear from the text.
Thanks
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DSGE user guide
by monsoon » Wed Mar 02, 2016 12:31 am
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Re: DSGE user guide
by jpfeifer » Wed Mar 02, 2016 10:23 am
From the profit maximization problem of the firm. The marginal cost is the multiplier on the constraint. Take a look at e.g. Walsh's textbook.
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