Find an expression for inflation, p˙(t), for t ≥ 0.
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Consider a continuous-time version of the Mankiw–Reis model. Opportunities to review pricing policies follow a Poisson process with arrival rate α > 0. Thus the probability that a price path set at time t is still being followed at time t+i is e−αi . The other assumptions of the model are the same as before. […]
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