Calibration for annual frequency

[jpfeifer]

For Calvo, you can compute the duration in years and map it to typical quarterly values. See

How to do a calbiration?

In a quarterly model with a zero inflation steady state, a four percent interest rate implies \beta\approx 0.99 a ten percent markup implies \varepsilon=11 as the gross steady markup is \frac{\epsilon}{\epsilon-1} five months average price duration is 1.6667 quarters. With \theta=0.4, the average price duration 1/(1-\theta)=1.6667 You need to make the slope of the PC equal, i.e. \frac{\varepsilon-1}{\gamma}=\frac{(1-\theta)(1-\beta\theta)}{\theta} and therefore \gamma =\frac{(\epsilon-1)\th…

For persistences, I would expect the fourth power of the quarterly persistence parameter. See e.g. Monthly parameters calibration from quarterly values - #2 by jpfeifer