First thank you for your previous guidance, I am grateful.
I plan to estimate a two country DSGE model, one country is U.S., the other country is China. For capital share in Cobb-Douglas production function, I plan to calibrate capital share directly.
I set capital share of Cobb-Douglas function to be 0.3 for U.S. economy, however, I am not sure about what value should I calibrate for China’s Cobb-Douglas function, because China uses a large share of capital in production, should I calibrate capital share for China to be 0.4 or 0.5?
Thank you very much and look forward to hearing from you.
That’s hard to tell. I would try to conduct a literature research. There must have been papers that faced this issue.