Dear Johannes and All Researchers3_CMR 2010.pdf (2.9 MB) ,
Thank you for your previous guidance, I am grateful.
I am calibrating a DSGE model which incorporates state-owned firms and privately-owned firms, I apply Christiano, Motto and Rostagno’s DSGE model with financial accelerator mechanism, they calibrate European intermediate good production’s fixed cost parameter as 0.29, and calibrate U.S. intermediate good production’s fixed cost parameter as 0.07, please refer to the PDF attachment on page 92 (original printed page 91), I am wondering for state-owned firms which specialized in heavy industry, should I calibrate fixed cost using 0.07 or 0.29, which one do you think is more appropriate for heavy industry? Likewise, which one is more appropriate for privately-owned firms which specialize in light industry?
Thank you very much and look forward to hearing from you.
Best regards,
Jesse
That’s hard to tell. Usually there is a calibration target involved, like firms make no profits in steady state to rule out entry and exit. For that reason you cannot simply transplant their parameter values.