addpath C:\dynare\6.1\matlab
clear all
close all
%% Calibrating the model
disp('%%%%%%%%%%%%%%%%%%%%%%%%%%%% CALIBRATING %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%')
OmegaRaw = [5 5; 7 7]; % Input-output flow matrix
finaluse = [20; 20]; % Final use vector
Govtsec = [2;2]; % Government sector
invsales = [4;4]; % Investment sales
invflows = [2 2; 2 2];
disc = 0.98;
matsize = size(OmegaRaw,1);
% Employment share of firms
alpha = [0.5 0.5];
% Depreciation rates
py = finaluse + sum(OmegaRaw,2);
depr = zeros(2,1);
for i = 1:matsize
depr(i) = ((1-disc)/disc)*(invsales(i)/...
((py(i) - sum(OmegaRaw(:,i),1))*(1-alpha(i))))/(1-(invsales(i)/...
((py(i) - sum(OmegaRaw(:,i),1))*(1-alpha(i)))));
end
% Vector of value added shares of firms
eta = 1 - sum(OmegaRaw,1)./(sum(OmegaRaw,2) + finaluse)';
% IO matrix
Omega = zeros(matsize,matsize);
for i = 1:matsize
Omega(i,:) = OmegaRaw(i,:)./sum(OmegaRaw,1);
end
Omega(isnan(Omega)) = 0;
% Investment IO matrix
invIO = [0.5 0.5; 0.5 0.5];
% Share of sales to firm j out of total sales of a firm
Delta = zeros(matsize,matsize);
for i = 1:matsize
Delta(:,i) = OmegaRaw(:,i)./py;
end
% Share of investment good sales to firm j out of total sales of a firm
iota = zeros(matsize,matsize);
for i = 1:matsize
for j = 1:matsize
iota(i,j) = invIO(i,j)*...
(disc*depr(j)/(1 - disc*(1-depr(j))))*...
(1-alpha(j))*eta(j)*(py(j)/py(i));
end
end
% Share of final consumption sales out of the total sales of a firm
phi = (finaluse - Govtsec - invsales)./py;
% Share of government demand out of the total sales of a sector
gamma = Govtsec./py;
% Vector of consumer expenditure shares
psi = (finaluse - invsales - Govtsec)./sum(finaluse - invsales - Govtsec);
% Labour share out of total of each sector
lambda = (alpha.*(py' - sum(OmegaRaw,1)))./sum((alpha.*(py' - sum(OmegaRaw,1))));
save("params.mat","alpha","eta","psi","Omega","invIO","lambda",...
"Delta","iota","phi","depr")
disp('Calibrated')
%% Solving model for effect of shock
disp('%%%%%%%%%%%%%%%%%%%%%%%%%%% SOLVING MODEL %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%')
dynare dynprodnetmodel.mod