As in Section 20.5, assume dZ Z = z dt + z dB for constants z and

As in Section 20.5, assume dZ Z = μz dt + σz dB∗

for constants μz and σz and a Brownian motion B∗ under the risk-neutral probability. Match industry supply (20.23) to industry demand Qt = (Zt/Pt)ε

to compute the equilibrium output price Pt. Define Yt = cπ P1/α

t . Compute constants δ, σ, and κ such that Y satisfies (20.25). Using the formula for the constant cπ derived in the previous exercise, specify a condition on the parameters A, α, w, μz, and σz that is equivalent to δ > 0.