I am trying to run USG 2003 model in JIE, the one JPfeiffer has coded, but with cobb-douglas preferences instead of GHH. It is not working. Any tips?
// Standard Open Economy DSGE Model
// Based on Uribe and Schmitt-Grohé chapter 4
// by Carlos Goncalves
var c, w, u_c, k, d, h, r, A, y, ca, i, tb, tb_y, ca_y;
varexo eps_A;
parameters beta, alpha, delta, sigma, phi, rstar, psi, rho_A, sigma_A, d_bar, gama;
// Parameter values
beta = 0.99; // Discount factor
alpha = 0.32; // Capital share
gama = 0.35;
delta = 0.025; // Depreciation rate
sigma = 2; // Risk aversion
phi = 0; // Capital adjustment cost parameter
rstar = (1/beta)-1; // International interest rate
psi = 0.01; // Debt elasticity parameter
rho_A = 0.4; // Productivity persistence
sigma_A = 0.01; // Productivity shock std
d_bar = 0.1; // Steady state debt level
model;
// MgU of consumption = shadow price
u_c=gama*(c^(-1))*((c^gama)*(1-h)^(1-gama))^((1-sigma*(1-sigma))/(1-sigma));
// Choosing debt gives Euler
u_c = beta*(1+r(+1))*u_c(+1);
// But you can also save in capital, choosing K
u_c = beta*u_c(+1)*(alpha*A(+1)*k(0)^(alpha-1)*h(+1)^(1-alpha));
// Investment including
i = k - (1-delta)*k(-1);
// MgDisutility of labor = MbBenefit earning more and thus consume
w = (c/(1-h))*(1-gama)/gama;
// demand for labor from firms
w= (1-alpha)*A*(k(-1)^alpha)*h^(-alpha);
// Production function
y = A*(k(-1)^alpha)*(h^(1-alpha));
// Budget constraint : to increase capital by i, you have to spend i+adj.costs
d = c + (i) + (1+r)*d(-1) - y;
// interest rate (debt-elastic around d_bar)
r(+1) = rstar + psi*(exp(d-d_bar) - 1);
// current account and trade balance-- definition
ca=-d+d(-1);
tb-r*d = ca;
tb_y=tb/y;
ca_y = ca/y;
// Productivity process
log(A) = rho_A*log(A(-1)) + eps_A;
end;
initval;
A = 1;
h = .3;
k = 10;
y = 1.2;
i = 0.3;
d = d_bar;
r = rstar;
c = .85;
ca=0;
tb=0.025;
end;
steady;
shocks;
var eps_A; stderr sigma_A;
end;
stoch_simul(order=1,irf=10, periods=2000);