Detailed Technical Appendix: SOE Growth Model

[reubenpjacob]

I develop a detailed technical appendix for a rich small open economy model with stochastic growth along the lines of the Swedish central bank model of Adolfson et al. It has the following features:

1. Consumption eulers and Rotemberg-type wage phillips curves for 3 different forms of utility functions which are non-separable between consumption and leisure: a) Jaimovich-Rebelo AER 2009 preferences b) Smets-Wouters AER 2007 preferences and c) standard Cobb-Douglas.
2. Endogenous discount factor to restore stationarity in the log-linearized incomplete markets model
3. Import-adjustment costs to differentiate between short-run and long-run import price elasticities
4. Time-varying distortionary tax rates on consumption, capital income and wage income
5. Government debt. Fiscal rules can be designed according to the modeller’s choice.
6. Rotemberg-type price adjustment costs and associated Phillips curves for domestic sales, export sales and import sales
7. Different import-shares for consumption and investment

The pdf file is available at http://punnoosejacob.com/notes-and-code/

cheers
Reuben