%%This is the file for paper: %%Small Open Economy Model with Labour Market Friction %%By Ben Wang @MQ %%Created: 13/11/2010 %% Update: 27/01/2012 %******************************************************************** var %******************************************************************** %Labour market H %number of hiring %Ua %unemployment after hiring N %employment Omega %labour market tightness w %real wage lambda_w %Normal rigidity: labour's time varying market power %Domestic economy rk %real rental rate of capital k %capital service R %nominal interest rate c %aggregate consumption psiz %stationarised households' Lagrangian multiplier P_kprime %price of installed capital i %investment k_tilde %capital stock %u %captial utilisation rate q %real balance y %domestic output mu_m %money growth rate m %real money %Marginal cost mc_d %domestic intermediate firm's marginal cost mc_mc %imported consumption firm's marginal cost mc_mi %imported investment firm's marginal cost mc_x %exporter's marginal cost %Domestic inflation pi_d %domestic economy inflation pi_mc %imported consumption good inflation pi_mi %imported investment good inflation pi_x %export inflation pi_c %CPI inflation %Market power (except wage) lambda_d %domestic producing firm time varying market power lambda_mc %imported consumption firm time varying market power lambda_mi %imported investment firm time varying market power lambda_x %exporter's time varying market power %Relative prices gamma_xstar %relative price b/t export price and foreign price level gamma_mcd %relative price b/t imported consumption and domestic goods gamma_mid %relative price b/t imported investment and domestic goods gamma_cd %relative price b/t consumption and domestic producer's price gamma_id %relative price b/t investment and domestic producer's price gamma_f %relative price b/t domestic and foreign price %AR(1) shocks mu_z %permanent technology growth eps %temporary technology deviation zeta_ome %temporary hiring cost shock zeta_c %consumption preference zeta_N %labour supply preference Gamma %investment specific technology shock z_tilde %asymmetic technology shock phi %risk premium shock %Exchange rate, net borrowing and risk premium S %exchange rate (direct quote) a %net foreign asset position x %real exchange rate %Foreign economy Rstar %foreign interest rate pi_star %foreign inflation ystar %foreign ouput ; %******************************************************************** varexo %******************************************************************** eps_mu_z % shock on permanent tech eps_eps % shock on temporary tech eps_ome % shock on labour market tightness eps_zeta_c % shock on consumption preference eps_zeta_N % shock on labour supply preference eps_Gamma % shock on investment specific technology eps_phi % shock on risk premium eps_R % shock on interest rate (Monetary Policy) eps_z_tilde % shock on assymetric techonolgy eps_ystar % foreign shock on foreign output eps_Rstar % foreign shock on foreign interest rate eps_pi_star % foreign shock on foreign inflation eps_lambda_d % shock on domestic markup eps_lambda_mc % shock on imported consumption markup eps_lambda_mi % shock on imported investment markup eps_lambda_x % shock on export markup eps_lambda_w % shock on wage markup ; %******************************************************************** parameters %******************************************************************** %AR(1) shock persistence parameters rho_ome rho_mu_z rho_zeta_c rho_zeta_N rho_Gamma rho_phi rho_ztilde rho_eps %Deep parameters delta alpha vartheta beta omega_c omega_i eta_c eta_i eta_f sigma_L sigma_q b B S_2prime phi_a f xi_d xi_mc xi_mi xi_x xi_w Aq AL chi sigma_a %Composite parameters %1.domestic real marginal cost kappa kappa_1 kappa_2 kappa_3 kappa_4 %2.nominal wage rigidty tau tau_b tau_f tau_c %3.real wage rigidity tau_1 tau_2 tau_3 tau_4 %Monetary policy parameters rho_R r_pi r_y r_x r_vpi r_vy %Steady state parameters %1.markup sslambda_d sslambda_mc sslambda_mi sslambda_x sslambda_w %2.relative price ssgamma_cd ssgamma_id %3.relative quantity ratio_c ratio_i ratio_ystar ratio_hiring %4.others ssUa ssOmega ssmu_z ssmu_m ssR ssw ssN ssm ssq sspi_d sspsiz ssrk ssk ssc ssy %Foreign economy ssystar sscm ssim rho_ystar1 rho_ystar2 rho_ystar3 rho_pi_star1 rho_pi_star2 rho_pi_star3 rho_Rstar1 rho_Rstar2 rho_Rstar3 rho_Rstar4 rho_Rstar5 ; %AR(1) shock persistence parameters rho_zeta_c = 0.85; rho_zeta_N = 0.85; rho_mu_z = 0.85; rho_eps = 0.85; rho_phi = 0.85; rho_Gamma = 0.85; rho_ome = 0.85; rho_ztilde = 0.85; %Deep parameters delta = 0.013; chi = 0.12; alpha = 0.29; beta = 0.999; vartheta = 0.5; B = 0.12; b = 0.65; xi_d = 0.65; xi_mc = 0.55; xi_mi = 0.65; xi_x = 0.65; xi_w = 0.65; S_2prime = 7.694; sigma_q = 10.62; phi_a = 0.01; f = 0.5; sigma_L = 1; omega_c = 0.31; omega_i = 0.55; eta_c = 1.45; eta_i = 1.5; eta_f =1.55; Aq = 0.3776; AL = 7.5; sigma_a = 0.01; %Steady state parameters %1.markup sslambda_mc = 1.2; sslambda_mi = 1.15; sslambda_w = 1.05; sslambda_d = 1.2; sslambda_x = 1.2; %2.relative price B36,B37 ssgamma_cd=((1-omega_c)+omega_c*(sslambda_mc)^(1-eta_c))^(1/(1-eta_c)); ssgamma_id=((1-omega_i)+omega_i*(sslambda_mi)^(1-eta_i))^(1/(1-eta_i)); %3.others ssN = 0.95; %0.95 added on 10/01/2012 ssmu_m = 1.01; ssmu_z = 1.005; ssUa = 1 - ssN; %B4 sspi_d = ssmu_m/ssmu_z; %B46 ssOmega = chi*(1-ssUa)/(ssUa+chi*(1-ssUa)); %B6 ssR = ssmu_z*sspi_d/beta; %B23 ssrk = (ssgamma_id*(ssmu_z-beta*(1-delta)))/beta; %B41 ssk = ssmu_z*ssN*(alpha/(sslambda_d*ssrk))^(1/(1-alpha)); %B42 ssc = (-(1-omega_i+omega_i*sslambda_mi^(-eta_i))*ssgamma_id^(eta_i)* (1-(1-delta)/ssmu_z)*ssk +(sslambda_d*ssrk*ssk)/(alpha*ssmu_z)- B*ssOmega^(vartheta)*delta*ssN)/((1-omega_c + omega_c*sslambda_mc^(-eta_c))*ssgamma_cd^(eta_c)); %B43 sspsiz = (1/(ssc*ssgamma_cd))*(ssmu_z-beta*b)/(ssmu_z-b); %B22 sscm = ((1-omega_c)*ssgamma_cd^eta_c)*ssc; %B44 ssim = ((1-omega_i)*ssgamma_id^eta_i)*(1-(1-delta)/ssmu_z)*ssk; %B45 ssy = ssrk*ssk/(ssmu_z*alpha); %B40 ssystar = sscm + ssim; %B15 ssq = (sspsiz*(ssR-1)/Aq)^(-1/sigma_q); %B29 %4.relative quantity ratio_c = ssc/ssy; ratio_i = (1-(1-delta)/ssmu_z)*ssk/ssy; ratio_ystar = ssystar/ssy; ratio_hiring = B*(ssOmega^vartheta)*chi*ssN/ssy; %5.wage rigidity %--------------------------------------------------------------------- %nominal wage rigidity B30 ssw = sslambda_w*AL*(ssN^sigma_L)/sspsiz; %real wage rigidity B31 % ssw=(1-beta*(1-chi)*(1-ssOmega)/(ssmu_z*sspi_d))*B*ssOmega^vartheta % + (AL*ssN^sigma_L)/sspsiz; %--------------------------------------------------------------------- ssm = ssw*ssN + ssq; %B47 %Monetary policy parameters rho_R = 0.8; r_pi = 1.71; r_y = 0.3; r_x = 0; r_vpi = 0.125; r_vy = 0.065; %Foreign economy rho_ystar1 = 0.8; rho_ystar2 = 0; rho_ystar3 = 0; rho_pi_star1 = 0; rho_pi_star2 = 0.75; rho_pi_star3 = 0; rho_Rstar1 = 0; rho_Rstar2 = 0; rho_Rstar3 = 0.85; rho_Rstar4 = 0; rho_Rstar5 = 0; %Composite parameters %1.domestic real marginal cost, under C8 kappa = ssw*ssR + (1+vartheta)*B*(ssOmega^vartheta)*(1+ beta*(1-chi)* ssmu_z*sspi_d*(vartheta*ssOmega/(1-vartheta) -1)); kappa_1 = -(1-alpha)*(ssw*ssR)/kappa; kappa_2 = -(1-alpha)*(1+vartheta)*(B*ssOmega^vartheta)/kappa; kappa_3 = -(1-alpha)*beta*(1-chi)*ssmu_z*sspi_d*(vartheta*ssOmega-1- vartheta)*B*(ssOmega^vartheta)/kappa; kappa_4 = (1-alpha)*beta*(1-chi)*ssmu_z*sspi_d*vartheta* (1+vartheta)*(1-ssOmega)*(B*ssOmega^vartheta)/kappa; %2.nominal wage rigidty, under C30 tau = (sslambda_w*sigma_L*(1-beta*xi_w))/(sslambda_w-1); tau_b = (1+tau)*xi_w/(1+xi_w*tau+beta*xi_w^2); tau_f = beta*xi_w/(1+xi_w*tau+beta*xi_w^2); tau_c = (1-beta*xi_w)*(1-xi_w)/(1+xi_w*tau+beta*xi_w^2); %3.real wage rigidity, under C31 tau_1 = (B*ssOmega^vartheta)/ssw; tau_2 = (AL*ssN^sigma_L)/(sspsiz*ssw); tau_3 = beta*(1-chi)*B*(ssOmega^vartheta)* (1-ssOmega)/(ssmu_z*sspi_d*ssw); tau_4 = beta*(1-chi)*B*(ssOmega^vartheta)* (ssOmega*(1+vartheta)-vartheta)/(ssmu_z*sspi_d*ssw); %******************************************************************** Model(linear); %******************************************************************** %-------------- %Labour market %-------------- %After hiring unemployment C1 %Ua = -(1 - ssUa)*N; %AR(1) to labour market tightness C2 zeta_ome = rho_ome*zeta_ome(-1) + eps_ome; %Tightness variable C3 %chi*(1 - ssUa)*Omega = -Ua + (1 - ssOmega)*(1 - chi)*Ua(-1); chi*(1 - ssUa)*Omega = (1 - ssUa)*N + (1 - ssOmega)*(1 - chi)*(-(1 - ssUa))*N(-1); %Hiring dynamics C4 chi*H = N - (1-chi)*N(-1); %------------------------------------ %Omestic producing firms %------------------------------------ %Aggregate output C5 y = sslambda_d*(eps + alpha*(k-mu_z) +(1-alpha)*N); %Permanent technology growth C6 mu_z = rho_mu_z*mu_z(-1) + eps_mu_z; %Temporary technology shock C7 eps = rho_eps*eps(-1) + eps_eps; %Real rental rate of capital C8 %rk = eps - (1-alpha)*(k - mu_z) - ((1-alpha)/(1-ssUa))*Ua + mc_d; rk = eps - (1-alpha)*(k - mu_z) - ((1-alpha)/(1-ssUa))*(-(1 - ssUa))*N + mc_d; %Domestic producing firm real marginal cost C9 mc_d =-eps+alpha*rk-kappa_1*(w+R(-1))-kappa_2*(eps+vartheta*Omega+zeta_ome) -kappa_3*(eps(+1)+mu_z(+1)+pi_d(+1)+zeta_ome(+1)) - kappa_4*Omega(+1); %Domestic price inflation C10 pi_d = (beta/(1+beta))*pi_d(+1) + (1/(1+beta))*pi_d(-1) + ((1-xi_d)*(1-beta*xi_d)/(xi_d*(1+beta)))*(lambda_d + mc_d); %Imported consumption good inflation C11 pi_mc = (beta/(1+beta))*pi_mc(+1) + (1/(1+beta))*pi_mc(-1) + ((1-xi_mc)*(1-beta*xi_mc)/(xi_mc*(1+beta)))*(lambda_mc + mc_mc); %Imported consumption good marginal cost C12 mc_mc = -mc_x - gamma_xstar - gamma_mcd; %Imported investment good inflation C13 pi_mi = (beta/(1+beta))*pi_mi(+1) + (1/(1+beta))*pi_mi(-1) + ((1-xi_mi)*(1-beta*xi_mi)/(xi_mi*(1+beta)))*(lambda_mi + mc_mi); %Imported investment good marginal cost C14 mc_mi = -mc_x - gamma_xstar - gamma_mid; %Exporter's inflation C15 pi_x = (beta/(1+beta))*pi_x(+1) + (1/(1+beta))*pi_x(-1) + ((1-xi_x)*(1-beta*xi_x)/(xi_x*(1+beta)))*(lambda_x + mc_x); %Exporter's marginal cost C16 mc_x = mc_x(-1) + pi_d - S + S(-1) - pi_x; %CPI inflation C17 pi_c = ((1-omega_c)*(ssgamma_cd)^(eta_c-1))*pi_d + (omega_c*(ssgamma_cd/sslambda_mc)^(eta_c-1))*pi_mc; %------------------------------------ %Households %------------------------------------ %Consumption preference shock C18 zeta_c = rho_zeta_c*zeta_c(-1) + eps_zeta_c; %Labour supply preference shock C19 zeta_N = rho_zeta_N*zeta_N(-1) + eps_zeta_N; %Labour supply preference shock C20 Gamma = rho_Gamma*Gamma(-1) + eps_Gamma; %Consumption Euler equation C21 c=((b*ssmu_z)/(ssmu_z^2-beta*b^2))*(c(-1)+ beta*c(+1)-mu_z + beta*mu_z(+1)) +((ssmu_z-b)/(ssmu_z^2-beta*b^2))*(ssmu_z*zeta_c - beta*b*zeta_c(+1)) -((ssmu_z-beta*b)*(ssmu_z-b)/(ssmu_z^2-beta*b^2))*(psiz+gamma_cd); %Households' Lagrangian multiplier C22 psiz = R + psiz(+1) - mu_z(+1) - pi_d(+1); %FOC with respect to captial stock C23 P_kprime = ((1-delta)*beta/ssmu_z)*P_kprime(+1) + psiz(+1) - psiz -mu_z(+1) +((ssmu_z - beta*(1-delta))/ssmu_z)*rk(+1); %FOC with respect to investment C24 P_kprime = gamma_id - Gamma + (ssmu_z^2)*S_2prime*((i-i(-1)+mu_z)- beta*(i(+1) - i + mu_z(+1))); %Capital accumulation C25 k_tilde=((1-delta)/ssmu_z)*(k_tilde(-1)-mu_z(-1))+(1-(1-delta)/ssmu_z)*(Gamma(-1)+i(-1)); %Captial utilisation rate C26 %u = k - k_tilde; %u = (1/sigma_a)*rk; k - k_tilde = (1/sigma_a)*rk; %Real money C27 q = -(1/sigma_q)*psiz - (ssR/(sigma_q*(ssR-1)))*R(-1); %UIP with risk premium C28 R - Rstar = S(+1) - S - phi_a*a + phi; %R(-1) - Rstar(-1) = S - S(-1) - phi_a*a(-1) + phi(-1); %Forex risk premium shock C29 phi = rho_phi*phi(-1) + eps_phi; %-------------------------------------------------------------------------- %Wage rigidity %Nominal wage rigidity C30 w = tau_b*(w(-1) + pi_c(-1) - pi_d) + tau_f*(w(+1) - pi_c + pi_d(+1)) +tau_c*(zeta_N + sigma_L*N - psiz + lambda_w); %Real wage rigidty C31 and C32 %w = f*w(-1) + (1-f)*( tau_1*(eps+vartheta*Omega+zeta_ome)+ % tau_2*(zeta_N+sigma_L*N- psiz)- % tau_3*(eps(+1)+zeta_ome(+1)+psiz(+1)-psiz-mu_z(+1)-pi_d(+1))+ % tau_4*Omega(+1)); %-------------------------------------------------------------------------- %------------------------------------ %Relative prices %------------------------------------ %b/t aggregate consumption and domestic price C33 gamma_cd = (1-(1-omega_c)/((ssgamma_cd)^(1-eta_c)))*gamma_mcd; %b/t aggregate investment and domestic price C34 gamma_id = (1-(1-omega_i)/((ssgamma_id)^(1-eta_i)))*gamma_mid; %b/t imported onsumption and domestic price C35 gamma_mcd = gamma_mcd(-1) + pi_mc - pi_d; %b/t imported investment and domestic price C36 gamma_mid = gamma_mid(-1) + pi_mi - pi_d; %b/t export and world price C37 gamma_xstar = gamma_xstar(-1) + pi_x - pi_star; %b/t domestic and foreign price C38 gamma_f = mc_x + gamma_xstar; %------------------------------------ %Monetary policy %------------------------------------ %Monetary Policy C39 R = rho_R*R(-1) + (1-rho_R)*(r_pi*pi_c(-1) + r_y*y(-1) + r_x*x(-1))+ r_vpi*(pi_c-pi_c(-1)) + r_vy*(y - y(-1)) + eps_R; %--------------------------------------------- %Exchange rate, net borrowing and risk premium %--------------------------------------------- %Real exchange rate C40 x=-mc_x-gamma_xstar-omega_c*((sslambda_mc/ssgamma_cd)^(1-eta_c))*gamma_mcd; %Assymetric techonolgy shock C41 z_tilde = rho_ztilde*z_tilde(-1) + eps_z_tilde; %Aggregate resource constraint C42 (1-omega_c)*((ssgamma_cd)^eta_c)*ratio_c*(eta_c*gamma_cd + c) + (1-omega_i)*((ssgamma_id)^eta_i)*ratio_i*(eta_i*gamma_id + i) + ratio_ystar*(ystar-eta_f*gamma_xstar+z_tilde) = y - alpha* (k-k_tilde) - ratio_hiring*(eps + vartheta*Omega + zeta_ome + H); %Evolution of net foreign assets C43 a = ssystar*(ystar+z_tilde- mc_x - eta_f*gamma_xstar)+(sscm + ssim)*gamma_f -sscm*(-eta_c*(1-omega_c)*ssgamma_cd^(-(1-eta_c))*gamma_mcd + c) +ssim*(-eta_i*(1-omega_i)*ssgamma_id^(-(1-eta_i))*gamma_mid + i) +(ssR/(sspi_d*ssmu_z))*a(-1); %Money market clearing C44 ssw*ssN*(w + N) = ssm*(mu_m + m - pi_d - mu_z) - ssq*q; %Definition of monety growth C46 mu_m(-1) = m + pi_d(-1) + mu_z(-1) - m(-1); %--------------------------------------------- %Markups and foreign economy %--------------------------------------------- %Markups lambda_d = 0.9*lambda_d(-1) + eps_lambda_d; lambda_mc = 0.85*lambda_mc(-1) + eps_lambda_mc; lambda_mi = 0.8*lambda_mi(-1) + eps_lambda_mi; lambda_x = 0.75*lambda_x(-1) + eps_lambda_x; lambda_w = 0.7*lambda_w(-1) + eps_lambda_w; %Foreign economy ystar = rho_ystar1*ystar(-1) + rho_ystar2*pi_star(-1) + rho_ystar3*Rstar(-1) + eps_ystar; pi_star = rho_pi_star1*ystar(-1) + rho_pi_star2*pi_star(-1) + rho_pi_star3*Rstar(-1) + eps_pi_star; Rstar = rho_Rstar4*ystar +rho_Rstar5*pi_star + rho_Rstar1*ystar(-1) +rho_Rstar2*pi_star(-1) +rho_Rstar3*Rstar(-1) + eps_Rstar; end; %******************************************************************** initval; %******************************************************************** %Labour market H = 0; %Ua = 0; N = 0; Omega = 0; w = 0; lambda_w = 0; %Domestic economy rk = 0; k = 0; R = 0; c = 0; psiz = 0; P_kprime = 0; i = 0; %u = 0; q = 0; y = 0; m = 0; mu_m = 0; k_tilde = 0; %Marginal cost mc_d = 0; mc_mc = 0; mc_mi = 0; mc_x = 0; %Domestic inflation pi_d = 0; pi_mc = 0; pi_mi = 0; pi_x = 0; pi_c = 0; %Market power (except wage) lambda_d = 0; lambda_mc = 0; lambda_mi = 0; lambda_x = 0; %Relative prices gamma_xstar = 0; gamma_mcd = 0; gamma_mid = 0; gamma_cd = 0; gamma_id = 0; gamma_f = 0; %AR(1) shocks mu_z = 0; eps = 0; zeta_ome = 0; zeta_c = 0; zeta_N = 0; Gamma = 0; z_tilde = 0; phi = 0; %Exchange rate, net borrowing and risk premium S = 0; a = 0; x = 0; %Foreign economy Rstar = 0; pi_star = 0; ystar = 0; end; %******************************************************************** %shocks; %******************************************************************** %var eps_mu_z; stderr 1; %var eps_eps; stderr 1; %var eps_ome; stderr 1; %var eps_zeta_c; stderr 1; %var eps_zeta_N; stderr 1; %var eps_Gamma; stderr 1; %var eps_phi; stderr 1; %var eps_R; stderr 1; %var eps_z_tilde; stderr 1; %var eps_lambda_d; stderr 1; %var eps_lambda_mc; stderr 1; %var eps_lambda_mi; stderr 1; %var eps_lambda_w; stderr 1; %var eps_lambda_x; stderr 1; %var eps_ystar; stderr 1; %var eps_Rstar; stderr 1; %var eps_pi_star; stderr 1; %end; %******************************************************************** %resid(1); %return; steady; check; model_diagnostics(M_,options_,oo_) %model_info; %stoch_simul(periods=500, irf =0); %******************************************************************** varobs y pi_d w c x R pi_c ystar pi_star Rstar, i; % Ua estimated_params; %rho_Rstar, 0.85, 0.1, 0.99; %rho_ystar, 0.85, 0.1, 0.99; %rho_pi_star, 0.85, 0.1, 0.99; %stderr eps_ystar, 10, 0.05, 100; %stderr eps_Rstar, 10, 0.05, 100; %stderr eps_pi_star, 10, 0.05, 100; %end; rho_zeta_c, beta_pdf, 0.85, 0.1; rho_zeta_N, beta_pdf, 0.85, 0.1; rho_mu_z, beta_pdf, 0.85, 0.1; rho_eps, beta_pdf, 0.85, 0.1; rho_phi, beta_pdf, 0.85, 0.1; rho_Gamma, beta_pdf, 0.85, 0.1; rho_ome, beta_pdf, 0.85, 0.1; rho_ztilde, beta_pdf, 0.85, 0.1; %chi, normal_pdf, 0.12, 0.1; %delta, normal_pdf, 0.013, 0.1; %alpha, normal_pdf, 0.29, 0.1; %beta, normal_pdf, 0.999, 0.01; %vartheta, normal_pdf, 0.5, 0.1; %B, normal_pdf, 0.12, 0.1; b, beta_pdf, 0.65, 0.1; xi_d, beta_pdf, 0.65, 0.05; xi_mc, beta_pdf, 0.55, 0.1; xi_mi, beta_pdf, 0.65, 0.1; xi_x, beta_pdf, 0.65, 0.1; xi_w, beta_pdf, 0.675, 0.05; S_2prime, normal_pdf, 7.694, 1.5; %sigma_q, normal_pdf, 10.62, 0.1; phi_a, inv_gamma_pdf, 0.01, 2; %f, normal_pdf, 0.5, 0.1; %sigma_L, normal_pdf, 1, 0.1; %omega_c, normal_pdf, 0.31, 0.1; %omega_i, normal_pdf, 0.55, 0.1; eta_c, inv_gamma_pdf, 1.45, 4; eta_i, inv_gamma_pdf, 1.5, 4; eta_f, inv_gamma_pdf, 1.55, 4; %Aq, normal_pdf, 0.3776, 0.1; %AL, normal_pdf, 7.5, 0.1; sslambda_mc, inv_gamma_pdf, 1.2, 2; sslambda_mi, inv_gamma_pdf, 1.15, 2; %sslambda_w, inv_gamma_pdf, 1.05, 2; sslambda_d, inv_gamma_pdf, 1.2, 2; %sslambda_x, inv_gamma_pdf, 1.2, 2; %ssUa, normal_pdf, 1, 0.1; %ssmu_z, normal_pdf, 1.006, 0.002; %sspi_d, normal_pdf, 1.03, 0.1; rho_R, beta_pdf, 0.8, 0.05; r_pi, normal_pdf, 1.7, 0.1; r_y, normal_pdf, 0.125, 0.05; r_x, normal_pdf, 0, 0.05; r_vpi, normal_pdf, 0.3, 0.1; r_vy, normal_pdf, 0.0625, 0.05; rho_Rstar1, beta_pdf, 0.8, 0.1; rho_ystar2, beta_pdf, 0.75, 0.1; rho_pi_star3, beta_pdf, 0.85, 0.1; stderr eps_mu_z, inv_gamma_pdf, 0.05, 1.4; stderr eps_eps, inv_gamma_pdf, 0.05, 1.4; stderr eps_ome, inv_gamma_pdf, 0.05, 1.4; stderr eps_zeta_c, inv_gamma_pdf, 0.05, 1.4; stderr eps_zeta_N, inv_gamma_pdf, 0.05, 1.4; stderr eps_Gamma, inv_gamma_pdf, 0.05, 1.4; %stderr eps_phi, inv_gamma_pdf, 0.05, 1.4; stderr eps_R, inv_gamma_pdf, 0.05, 1.4; stderr eps_z_tilde, inv_gamma_pdf, 0.05, 1.4; %stderr eps_lambda_d, inv_gamma_pdf, 0.05, 1.4; %stderr eps_lambda_mc, inv_gamma_pdf, 0.05, 1.4; %stderr eps_lambda_mi, inv_gamma_pdf, 0.05, 1.4; %stderr eps_lambda_w, inv_gamma_pdf, 0.05, 1.4; %stderr eps_lambda_x, inv_gamma_pdf, 0.05, 1.4; stderr eps_ystar, inv_gamma_pdf, 0.05, 1.4; stderr eps_Rstar, inv_gamma_pdf, 0.05, 1.4; stderr eps_pi_star, inv_gamma_pdf, 0.05, 1.4; end; %******************************************************************** %estimated_params_init; %rho_zeta_c, 0.85; %rho_zeta_N, 0.85; %rho_mu_z, 0.85; %rho_eps, 0.85; %rho_phi, 0.85; %rho_Gamma, 0.85; %rho_ome, 0.85; %rho_ztilde, 0.85; %chi, 0.12; %delta, 0.013; %alpha, 0.29; %rho_Rstar,0.85; %rho_ystar, 0.85; %rho_pi_star, 0.85; %end; %******************************************************************** %estimation(datafile = artificial_data1, lik_init=2); estimation(datafile = artificial_data, xls_sheet = select_norminal_rigidity, xls_range = A1:L200);