Hi all,
I am trying to replicate the figures from Eric Sims notes about New Keynesian Model with both price and wage stickiness. I have some trouble with equations 2,11 and 13 but I can’t identify what is wrong. Can someone help me?
Thank you! NKM_pricewage_orig.mod (2.6 KB)
Your definition of
N_ss=((epsilon_w-1/epsilon_w)*(1/psi)*((v_ss)^(-sigma))*mc_ss*(((1-phi_w*((1+pi_ss)^(epsilon_w-1)))/(1-phi_w)))^((1+epsilon_w*eta)/1-epsilon_w)*(1-beta*phi_w*(1+pi_ss)^(epsilon_w*(1+eta)))/(1-beta*phi_w*((1+pi_ss)^(epsilon_w-1))))^(1/(sigma+eta));
is missing a bracket around (epsilon_w-1)
(epsilon_w-1)
Let me add that your mod-file does not handle parameter dependence correctly, because you hard-code the steady state values. That is not recommended.
NKM_pricewage_orig.mod (2.6 KB)