Hey everyone,
I am working on the DSGE Model of Gali 2007: Understanding the effects of government spending on consumption and I have following code (see below). These are based on US quarterly time-series data. I would like to change the parameters (calibration) of this one with let’s say chinese values for these parameters. How can I do that and where can I find these different values?
Best Regards
Sebástian
// Model: NK_GLSV07_iclm
// Title: Understanding the effects of government spending on consumption
// Authors: Jordi Gali, J. David Lopez-Salido and Javier Valles
// Publication: Journal of the European Economic Association.
// This file simulates the dynamic response of the model to the fiscal policy shock
// Version of the model: Imperfectly competitive labor market
// Replicated impulse responses do not match the IRFs from the paper precisely for all the variables.
// Qualitatively they are the same.
// Replication coded by: Lazar Milivojevic
// Variables
var n c pi k b g y w t i;
predetermined_variables k, b ;
varexo e_c;
//Parameters
parameters alpha beta gamma_c gamma_c_bar gamma_g delta eta theta theta_n theta_tau lambda lambda_p my_p rho rho_g sigma_bar phi_b phi_g phi_pi omega psi phicap;
//Calibration
alpha=0.33; %Elasticity of output with respect to capital 0.33
beta=0.99; %Household discount factor 0.99
gamma_g=0.2; %Share of government purchase to output in steady state 0.2
delta=0.025; %Depreciation rate of capital 0.025
eta=1; %The elasticity of incestement wrt q 1
theta=0.75; %Fraction of firms that keep their price constant 0.75
lambda=0.5; %Amount of rule-of-thumb households 0.5
my_p=1.2; %Steady state price markup 1.2
psi=0.2; %Elasticity of wages wrt hours 0.2
phi_pi=1.5; %The response of the monetary authority to inflation 1.5
rho= beta^(-1)-1;
gamma_c= (1-gamma_g) - deltaalpha/((rho+delta)my_p);
gamma_c_bar= gamma_c + gamma_g;
lambda_p= (1-betatheta)(1-theta)/theta;
//parameters describing the fiscal policy rule
phi_b=0.33;
phi_g=0.10;
rho_g=0.9;
//parameter generated for the solution of the model
phicap= 1/(gamma_cmy_p - lambda(1-alpha));
sigma_bar= 1/((1-lambda)phicapgamma_cmy_p);
omega= eta(1-beta*(1-delta))(1-gamma_c_bar) ;
theta_tau= lambdaphicapmy_p ;
theta_n= lambdaphicap*(1-alpha)*(1+psi) ;
model;
// C1 //41
k(+1) = (1-delta+deltaalpha/(1-gamma_c_bar))k + ndelta(1-alpha)/(1-gamma_c_bar) - cdeltagamma_c/(1-gamma_c_bar) - g*delta/(1-gamma_c_bar);
// C3 //43
pi = betapi(+1) + lambda_pc - alphalambda_pk + (alpha + psi)lambda_pn;
// C6 //46
c - theta_nn + piphi_pi/sigma_bar = c(+1) + pi(+1)/sigma_bar - theta_nn(+1) + theta_tauphi_b*(b(+1)-b) + theta_tauphi_g(rho_g-1)*g;
// C7 //47
(1-alpha)n - gamma_cc - (1-gamma_c_bar-alpha)k + (1-gamma_c_bar)etaphi_pipi = (omega*(1+psi)+beta*(1-alpha))n(+1)+(omega-betagamma_c)c(+1)- (omega+beta(1-gamma_c_bar-alpha))k(+1) + (1-gamma_c_bar)etapi(+1) + (1-betarho_g)*g ;
// 37
b(+1)= (1+rho)*(1-phi_b)b + (1+rho)(1-phi_g)*g; //fiscal policy rule
// 21
g=rho_g*g(-1) + e_c; //fiscal policy
// 35
y= (1-alpha)n + alphak;//aggregate production function
// additional equations in order to replicate all the IRFs from the paper:
// 30
w = c + psi*n; //log-linear approximation to a generalized wage schedule
// 20
t = phi_bb - phi_gg; //fiscal policy rule
// inv
i = k + 1/(1-gamma_c_bar)*((1-alpha)n - gamma_cc - g - (1 - gamma_c_bar - alpha)*k);
end;
initval;
n=0;
c=0;
pi=0;
k=0;
b=0;
g=0;
y=0;
end;
steady;
shocks;
var e_c=1;
end;
stoch_simul(order=1, irf=20) ;