Dear all,
I am currently working on a DSGE model and I am facing two problems:

I’m not sure whether my timing is correct. I thought the convention is that in the current period households choose K, which is thought of as next periods capital stock, and take K(1) as given, whereas firms choose K(1) today. However, if I model it like this, the shocks seem to enter the model with a delay such that my IRFs look a bit funny. But if I let the firm choose K (instead K(1)) as well, the IRFs look fine and the problem seems to be solved. So is this simply the way to do it? (–> See model_smoothIRFs.mod + outputhelperfiscal_smooth.m & steadystatehelperfiscal_smooth.m for the steady state computation)

Also, I am having troubles calibrating the parameters to match some empirical facts. I do not want to estimate the model on data using Bayesian estimation techniques or something like that, I simply want to choose the parameters such that my model satisfies a few empirical facts.
In more detail, I have two sectors (official and underground) in latter of which agents and firms do not have to pay taxes. Now I want to match some targets, e.g. that the underground sector is about 27% of total production (official + underground production). The way I approached so far is I declared some parameters as endogenous variables and introduced extra equations in the model and steady_state_model sections specifying my targets (e.g. “Yu/Y = 0.27” for the 27% underground ratio). Unfortunately, though, it always returns complex steady states now, even if I don’t specify the actual empirical targets but the exact values computed in steady state when I don’t endogenize the parameters… (–> see model_calibration.mod + outputhelperfiscal_calibration.m & steadystatehelperfiscal_calibration.m for the steady state computation)
Any form of help would be much appreciated!
Thanks a lot in advance!
model_smoothIRFs.mod (7.1 KB)
outputhelperfiscal_smooth.m (970 Bytes)
steadystatehelperfiscal_smooth.m (1.9 KB)
model_calibration.mod (7.4 KB)
outputhelperfiscal_calibration.m (1.1 KB)