... model, conditions (1. 7) and (1. 9) of the aggregate-supply block, the asset-pricing relations (1. 14), conditions (1. 10) – (1. 12) specifying monetarypolicy, and conditions (1. 16) – (1. 17) specifying ... ξt). (1. 8)Finally, the definition (1. 1) implies a law of motion for the aggregate price index of the formPt= (1 − α)p 1 θt+ αP 1 θt 1 1 1−θ. (1. 9)Equations (1. 7) and (1. 9) jointly ... of the specificationof the functions ψ in equation (1. 11) , ωmin equation (1. 12), and ωfin equation (1. 17).The reason for this is fairly simple. The set of restrictions on the processes {p∗t,...