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Hi!

In order to make a Bayesian estimation I need to add two preference shocks to a Cobb Douglas utility function

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U=chi*[C^theta*(1-eta*L)^1-theta)]

Where chi and eta are intertemporal and intratemporal preference shocks, L is labor, 1-L is leasure, C consumption. Anyone can suggest me any paper or Dynare example of this? I am having many troubles getting a correct dynare implementation of it in log-linearized form.

Thank you very much!

Sarah

This should be straightforward. Could you be more precise what issues you encounter/where the problems are?

Ok it was just and algebric issue... thanks!

Would someone be able to provide sample dynare code for log-linearization of the first order conditions (for consumption and labor) for these preferences! Thank you sooo much in advance!

What exactly is your question? The AguiarGopinath2007.mod on my homepage has this type of preferences implemented.