This appendix outlines the model of firms, households, and the labor market. Final goods producers aggregate intermediate goods, face competition, and maximize profits, with their production decisions influenced by the elasticity of demand and exogenous shocks. The optimal input quantities depend on the relative prices of goods and the aggregator function. Intermediate goods producers use capital and labor to produce goods, facing fixed costs and variable costs, and set prices under Calvo pricing with partial indexation. Their optimal pricing decisions depend on future expectations, inflation, and the marginal cost of production. Households maximize utility over consumption, labor supply, and investment, subject to budget constraints and capital accumulation. They face exogenous shocks to bond returns and investment prices, and their decisions are influenced by the marginal utility of consumption and leisure. The labor market involves intermediate labor unions that differentiate labor services and set wages, with labor packers acting as intermediaries between unions and firms. The real wage is determined by the marginal rate of substitution between leisure and consumption, and labor unions have market power in setting wages. The model incorporates various stochastic processes for exogenous shocks and parameters, and equilibrium conditions ensure consistency across firms, households, and the labor market.This appendix outlines the model of firms, households, and the labor market. Final goods producers aggregate intermediate goods, face competition, and maximize profits, with their production decisions influenced by the elasticity of demand and exogenous shocks. The optimal input quantities depend on the relative prices of goods and the aggregator function. Intermediate goods producers use capital and labor to produce goods, facing fixed costs and variable costs, and set prices under Calvo pricing with partial indexation. Their optimal pricing decisions depend on future expectations, inflation, and the marginal cost of production. Households maximize utility over consumption, labor supply, and investment, subject to budget constraints and capital accumulation. They face exogenous shocks to bond returns and investment prices, and their decisions are influenced by the marginal utility of consumption and leisure. The labor market involves intermediate labor unions that differentiate labor services and set wages, with labor packers acting as intermediaries between unions and firms. The real wage is determined by the marginal rate of substitution between leisure and consumption, and labor unions have market power in setting wages. The model incorporates various stochastic processes for exogenous shocks and parameters, and equilibrium conditions ensure consistency across firms, households, and the labor market.