Great Difficulty in Calibrating the Labor Disutility Parameter

Dear all,

I’m trying to calibrate the labor disutility parameter \varphi_l in order to obtain the 0.33 value for labor at the steady state. However, I’m finding great difficulty in deriving the the parameter value since the FOC of labor is expressed in the lagrangian multiplier \lambda_t and wage w_t which both are unknowns and aren’t expressed in terms of other parameters. The author found 1.45 for \varphi_l, however I was unable to find the same value by myself. Can anyone please provide me with some help? Below are FOC of the household and entrepreneur and tables containing the calibrated parameters and the steady states of the variables. Thanks in advance.

Can you point to the source document?

Hi VS19,

The PDF document can be downloaded for free here:

I’m interested in replicating the second chapter of the Ph.D. thesis. The calibration subsection and Table A.1 and A.2 contain information about the steady state values and calibrated parameters. I’ve been trying for two days now to derive the disutility of work parameter which was set to 1.45 but to no avail. Thanks for your response and interest.

This is always tricky as it involves solving for the wage and consumption, which will then determine \lambda. Put differently, you have to solve for the whole steady state, based on knowing the steady state of l_t. In a last step, 2.4 can be used to directly compute \phi_l.

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