Alvarez, Fernando (contributor); Atkeson, Andrew (contributor) - 2007
conditional means of the log
of two variables: the representative agent’s marginal utility growth and inflation. (Changes in these … inflation.
That common assumption, however, is grossly inconsistent with a well-established feature
of the data: nominal rates … inflation rate.
Analysts then commonly assume that the data are well-approximated by a conditionally log-normal
model, so that …