A question about Carlstrom and Fuerst 1997 model

I downloaded the dynare code from Ambrogio’s webpage

I try to replicate the model myself but I have problems with the calibration.

My question is, how do they determine the initial value of omegab =0.603892??

I will appreciate it a lot if someone can help me with this simple question!
CF97.mod (3.09 KB)

It is determined so that f=0.39.

mu = 0.25; S = 0.207; M = -.5*S^2; omegab = 0.603892; PHI = normcdf((log(omegab)-M)/S); phi = normpdf((log(omegab)-M)/S) / (omegab*S); g = normcdf((log(omegab)-M)/S - S) - PHI*mu + (1-PHI)*omegab; f = 1-mu*PHI- g;

Dear Pfeifer
I have another few questions:

In page 900, “PHI is lognormal with a mean of unity and a standard deviation sigma” . Suppose that ln(omega) ~N(M,S). Then, we have the following relationship: exp(M+.5*S^2)=1, and (exp^(S^2)-1)*exp(2M+S^2)=sigma. In my opinion, S and sigma is different, but in the dynare code written by Ambrogio, they are the same.

In the equation " g = normcdf((log(omegab)-M)/S - S) - PHI*mu + (1-PHI)*omegab; ", I do know why the first term in right side needs to substract S.


I haven’t looked at the paper in a long time. Have you asked Ambrogio about this?