Covid Analysis Gali (2015), ch.7

General DSGE Modeling
1

Dear all,

I have a question regarding the possibility of modeling an economy during the Corona year in the DSGE framework.
To do this, I wanted to use the model in Gali (2015), chapter 7, since it explicitly includes unemployment in the model. Since all the variation in the model occurs at the extensive margin, I thought of creating a two-sector labor market in which, after a shock (e.g., demand shock), one sector is still working but the other stops working. The resulting variables are then aggregated.

I know it does not sound very realistic but I need a deviation from the model in order to model the economy somehow during Covid.
What do you mean? Is it possible to do that and is the coding of this possible for beginners (I do not ask to code it but I just would like to hear your opinion on that :). Thanks a lot for your view.

Best regards

2

That depends very much on what you mean with

Modifying a model is a lot easier than setting one up from the start. But it still requires some DSGE modeling skills.

3

Dear Prof. Pfeifer

Yes, you are absolutely right. The question was not well reasoned, sry for the circumstances.
However, I will give it a try and see what comes out.

Thanks.
Best regards

4

Dear Prof.Pfeifei
Do you have the pdf of Gali (2015):“Monetary policy, inflation and the business cycle”? Can you share with me? Thank you!

5

No, I don’t have the PDF.

6

ok_hand:,Thank you!