Intertemporal and intratemporal shocks on the utility


In order to make a Bayesian estimation I need to add two preference shocks to a Cobb Douglas utility function

Where chi and eta are intertemporal and intratemporal preference shocks, L is labor, 1-L is leasure, C consumption. Anyone can suggest me any paper or Dynare example of this? I am having many troubles getting a correct dynare implementation of it in log-linearized form.

Thank you very much!


This should be straightforward. Could you be more precise what issues you encounter/where the problems are?

Ok it was just and algebric issue… thanks!

Would someone be able to provide sample dynare code for log-linearization of the first order conditions (for consumption and labor) for these preferences! Thank you sooo much in advance! :stuck_out_tongue:

What exactly is your question? The AguiarGopinath2007.mod on my homepage has this type of preferences implemented.