Calibration: Quarterly data or annual data?

I use one of the math softwares to get the steady state of the model (The model is relatively large and the analytical method is very difficult). That is, I solve the system of Steady State equations in the software

In calibration, we encounter several types of parameters
1- Parameters such as beta delta and … for examle beta=0.98 …
2- Variables in the steady state: such as c_ss/y_ss g_ss/y_ss and … for example c_ss/y_ss=0.54

3- Variables such as interest rates, inflation rates, etc( in the steady state)

My understanding is that when I use the ratio, there is no difference between annual and quarterly data.For example, for c_ss/y_ss, there is no difference between annual and quarterly data. Because it is a ratio.

Now with this understanding; I consider the rest of the parameters annually.For example
, the annual inflation rate=0.05
Annual interest rates=0.06;
I also consider other parameters in this way: beta=0.98 delta=0.02 annualy

So finally my calibration is as follows:
the annual inflation rate=0.05
the annual interest rates=0.06;
The rest of the parameters are obtained by solving the system of equations in the mathematical software.

Am I wrong?Or I must use quarterly data

Hi, I think your assumption regarding the ratios being independent of the frequency is wrong. It depends on the nature of the variables. If the ratio involves stock (e.g. capital) and flow (e.g. output) variables, the frequency will matter (it would affect for instance what you deduce for the depreciation rate).


Indeed. Some of the issues are outlined in Pfeifer(2013): “A Guide to Specifying Observation Equations for the Estimation of DSGE Models”

Hi michaelm,
I construct a heterogeneous households model. However, I fail to get the steady state of the model because the system of equations can not be solved. Could you share me with the name of the software you used for solving the system of equations?

Thank you for helping!

hi wanjingwan
I use the Maple software
Working with this software is very simple. I recommend using it

Thank you for your reply.