Steady-state file

[jpfeifer]

There are two common approaches:

1. You fix labor to a particular value and compute the disutility parameter that causes the steady state to hold at the particular value for hours worked. E.g.

Steady-state negative Frisch Elasticity

The Frisch elasticity is still a parameter. I don’t understand what you are doing. When you calibrate labor in steady state, the disutility parameter needs to be adjusted accordingly. But that is different from the Frisch elasticity. See e.g. which features a unit Frisch elasticity, but sets the labor disutility parameter phi to have labor as 1/3

2. It is often possible to reduce the problem of steady-state finding to a single equation in labor (plugging in for consumption in the budget constraint based on the labor FOC). That equation is often rather easy to solve because you know that the value should be between 0 and 1.