<p>For some reason Ubiquitous edited this information into the question, rather posting it as an answer:</p>

<blockquote>
  <p><span class="math-container">$i$</span> indexes the goods available for consumption</p>
</blockquote>

<p>Integrals are just sums with a lot of components (technically infinite). Here the space of goods is assumed to have large dimension, rather than just consisting of two or three types of goods.</p>

CC BY-SA 4.0
2019-03-31T09:42:46.317Z
2019-03-31T14:11:38.257Z
2019-03-31T14:11:38.257Z
Giskard
<p>I am reading <strong><em>Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications</em></strong> by Gali.</p>

<p>In section 3.1 he presents/defines the consumption as
<span class="math-container">$$
C_t:= \left(\int^1_0C_t(i)^{\frac{\epsilon-1}{\epsilon}}di\right)^{\frac{\epsilon}{\epsilon-1}}
$$</span></p>

<p><span class="math-container">$\epsilon$</span> is the elasticity of substitution and <span class="math-container">$i$</span> indexes the goods available for consumption. It is related to the New Keynesian Model.</p>

<p><strong>Can someone give me <em>verbal</em> explanation of why it make sense to define the consumption this way?</strong></p>

<p><span class="math-container">$C_t(i):$</span> How should interpret the <span class="math-container">$i$</span>-line? </p>

<macroeconomics><consumption><new-keynesian-economics>
Why consumption is defined as $ C_t:= \left(\int^1_0C_t(i)^{\frac{\epsilon-1}{\epsilon}}di\right)^{\frac{\epsilon}{\epsilon-1}} $
Sanjay
# Why consumption is defined as $ C_t:= \left(\int^1_0C_t(i)^{\frac{\epsilon-1}{\epsilon}}di\right)^{\frac{\epsilon}{\epsilon-1}} $

(Asked by: username_0 on 2019-03-30)

I am reading ***Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications*** by Gali.

In section 3.1 he presents/defines the consumption as
$$
C\_t:= \left(\int^1\_0C\_t(i)^{\frac{\epsilon-1}{\epsilon}}di\right)^{\frac{\epsilon}{\epsilon-1}}
$$

$\epsilon$ is the elasticity of substitution and $i$ indexes the goods available for consumption. It is related to the New Keynesian Model.

**Can someone give me *verbal* explanation of why it make sense to define the consumption this way?**

$C\_t(i):$ How should interpret the $i$-line?

**Tags:** macroeconomics, consumption, new-keynesian-economics

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## 1 answers

### Answer by username_1 on 2019-03-31. Score: 1 | Accepted answer

For some reason Ubiquitous edited this information into the question, rather posting it as an answer:

> $i$ indexes the goods available for consumption

Integrals are just sums with a lot of components (technically infinite). Here the space of goods is assumed to have large dimension, rather than just consisting of two or three types of goods.


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