Hi,

I’m trying to replicate Ollivaud(2018) which is titled " Investment as a transmission mechanism from weak demand to weak supply and the post-crisis productivity slowdown"

Here’s my dynare code below to replicate the simulation in the box 1 of the paper above.

It would be appreciated if you have a look and comment or help to correct this coding.

Thanks you.

## ollivaud.m (45 Bytes)

var y gap k y_star;

varexo n e eps;

parameters alpha beta0 beta1 gamma0 gamma1 gamma2 gamma3 gamma4 gamma5;

alpha = 2/3;

beta0 = 0.96;

beta1 = -0.07;

gamma0 = 0.95;

gamma1 = 0.015;

gamma2 = 0.006;

gamma3 = 0.004;

gamma4 = -0.002;

gamma5 = -1.23;

model;

y_star = alpha * (n+e) + (1-alpha) * k;

y = y_star + gap;

gap = beta0 * gap(-1) + beta1 * gap(-2) + eps;

k - k(-1) = gamma0 * (k(-1) - k(-2)) + gamma1 * (y(-1) - y(-2)) + gamma2 * (y(-2) - y(-3)) + gamma3 * (y(-3) - y(-4)) + gamma4 *(k(-1) + (gamma5 * y(-1)));

end;

initval;

y_star = 0;

y = 0;

gap = 0;

k = 0;

end;

steady;

check;

shocks;

var eps;

stderr -4;

end;

stoch_simul(order=2, irf=60) k y_star gap;