# Gali 2007: Understanding the Effects of Government Spending on Consumption different country **URL:** \ **Category:** General DSGE Modeling\ **Created:** [14 June 2021 20:52 UTC](https://forum.dynare.org/t/gali-2007-understanding-the-effects-of-government-spending-on-consumption-different-country/18306 "2021-06-14T20:52:02Z")\ **Posts on this page:** 4\ **Page:** 1
**Author:** ![sebsap12](https://forum.dynare.org/letter_avatar_proxy/v4/letter/s/6f9a4e/32.png) [@sebsap12](https://forum.dynare.org/u/sebsap12)\ **Post date:** [14 June 2021 20:52 UTC](https://forum.dynare.org/t/gali-2007-understanding-the-effects-of-government-spending-on-consumption-different-country/18306/1 "2021-06-14T20:52:02Z")
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) - delta_alpha/((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\_c_my\_p - lambda_(1-alpha)); sigma\_bar= 1/((1-lambda)_phicap_gamma\_c_my\_p); omega= eta_(1-beta\*(1-delta))_(1-gamma\_c\_bar) ; theta\_tau= lambda_phicap_my\_p ; theta\_n= lambda_phicap\*(1-alpha)\*(1+psi) ; model; // C1 //41 k(+1) = (1-delta+delta_alpha/(1-gamma\_c\_bar))k + ndelta_(1-alpha)/(1-gamma\_c\_bar) - c_delta_gamma\_c/(1-gamma\_c\_bar) - g\*delta/(1-gamma\_c\_bar); // C3 //43 pi = beta_pi(+1) + lambda\_p_c - alpha_lambda\_p_k + (alpha + psi)_lambda\_p_n; // C6 //46 c - theta\_n_n + pi_phi\_pi/sigma\_bar = c(+1) + pi(+1)/sigma\_bar - theta\_n_n(+1) + theta\_tau_phi\_b\*(b(+1)-b) + theta\_tau_phi\_g_(rho\_g-1)\*g; // C7 //47 (1-alpha)_n - gamma\_c_c - (1-gamma\_c\_bar-alpha)_k + (1-gamma\_c\_bar)etaphi\_pi_pi = (omega\*(1+psi)+beta\*(1-alpha))_n(+1)+(omega-beta_gamma\_c)_c(+1)- (omega+beta_(1-gamma\_c\_bar-alpha))_k(+1) + (1-gamma\_c\_bar)etapi(+1) + (1-beta_rho\_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 + alpha_k;//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\_b_b - phi\_g_g; //fiscal policy rule // inv i = k + 1/(1-gamma\_c\_bar)\*((1-alpha)_n - gamma\_c_c - 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) ; ---
**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\ **Post date:** [15 June 2021 08:57 UTC](https://forum.dynare.org/t/gali-2007-understanding-the-effects-of-government-spending-on-consumption-different-country/18306/2 "2021-06-15T08:57:41Z")
You would need to search the literature on DSGE models of the Chinese economy. ---
**Author:** ![sebsap12](https://forum.dynare.org/letter_avatar_proxy/v4/letter/s/6f9a4e/32.png) [@sebsap12](https://forum.dynare.org/u/sebsap12)\ **Post date:** [15 June 2021 08:59 UTC](https://forum.dynare.org/t/gali-2007-understanding-the-effects-of-government-spending-on-consumption-different-country/18306/3 "2021-06-15T08:59:17Z")
Could you tell me where I can search these things? I was keep looking yesterday but I was not able to find any parameter values. Thank you! ---
**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\ **Post date:** [15 June 2021 09:07 UTC](https://forum.dynare.org/t/gali-2007-understanding-the-effects-of-government-spending-on-consumption-different-country/18306/4 "2021-06-15T09:07:18Z")
Use Google. See e.g. [Capital controls and optimal Chinese monetary policy - ScienceDirect](https://www.sciencedirect.com/science/article/abs/pii/S0304393215000501)