Here is the replication so far:
Several warnings:
- The information given in the paper( targeted steady state values and chosen parameters) yields negative unemployment benefits from the steady state relationships (b=-0.02), as opposed to a value of around 0.08 consistent with the replacement rate b/(w*h)=0.1 given in the paper.
- At first I typed in the loglinearized system of equations as it is given in the working paper, but the impulse responses for vacancy creation and destruction looked very different. So I did the loglinearizations myself which yielded slightly different equations for vacancy posting and job destruction. Now, surprisingly the impulse responses are a lot closer.
The author unfortunately hasn’t answered so far.
Also I’m still not sure that I have wrapped my head around the timing thing:
So again the model features this equation:
n_t =(1-rho_{t-1})n_{t-1}+m_{t-1}The number of employed workers at the beginning of period n_t are those employed workers n_{t-1} who are not separated endogenously with prob rho_{t-1}, in addition to new matches formed m_{t-1}.
To implement it in dynare I have used your first suggestion
n_t =(1-rho_{t})n_{t-1}+m_{t}Now I have to think of the stock of employment n_t as the end of period stock in the code equivalent to the beginning of period stock in the model, and this is why the impulse response of n in dynare now shows an immediate jump, correct?
The model also features an equation for the amount of searching workers u_t
u_t =1- (1-rho_{t})n_{t}In words: the amount of searching workers at the beginning of period t, u_t includes those that separate from from firms at the beginning of period t and start searching for work in the same period.
In the code I did this through
u_t =1- (1-rho_{t})n_{t-1}And I changed the timing of n in all other equations as well…
I don’t understand why doing this had no effect in the model except shifting the impulse response of n by one period.
trigarit09.mod (5 KB)