Formal description of the model The term @od; t represents the price of human capital which depends on the business cycle The business cycle evolves according to an aro which we discretise G[,v并ⅠD,N,乡 v represents the aggregate shockFormal Description of the model • The term represents the price of human capital which depends on the business cycle • The Business cycle evolves according to an AR(1) which we discretise •  represents the aggregate shock G ❖G v, v IID,N0,v 2 ☺GEdiGt