Hello everyone,
I am relatively new to DSGE modeling and would appreciate any suggestions or references on how to proceed with my research.
I want to build a DSGE model to analyze how institutional quality affects the allocation of talent between a productive sector (e.g., STEM careers) and an unproductive, rent-seeking sector (e.g., law, administration). My motivation follows the work of Murphy (1991), North, and Acemoglu, who argue that institutional quality—defined as the degree to which property rights are protected—shapes economic incentives and talent distribution.
I plan to use official data sources to calibrate the model and run simulations on how changes in institutional quality affect talent allocation. Institutional shocks in the literature are often modeled as permanent.
I would really appreciate any guidance, references, or example models that could help me get started. Specifically:
- Are there any key DSGE papers or models that deal with institutional quality and labor allocation?
- How should I approach modeling institutional shocks in Dynare?
- Any advice on calibrating the model with real-world data?
Thanks in advance for any insights!