I am simulating a basic dsge model with heterogeneity in firms and households sectors. Firms have access to regular and irregular technology and some households face liquidity constraints.
My professor asked me to compute fiscal multiplier, but I have no clue where to start from.
She told me that I should use a deterministic shock and she also mentioned a trick to avoid the computation of the end value since I do not have a lot of time. However I have not really understood what she meant.
Can anybody help me?
Thanks a lot
That is a typical case where you should look for the help of your professor instead of this forum. It is your professor’s job to provide you with sufficient training to be able to do the assigned tasks. Moreover, she seems to have a precise idea what you should do.
Ok, I will ask her.
Thank you anyway.