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strange condition in Lubik and Schorfheide (2007)
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strange condition in Lubik and Schorfheide (2007)
by earsmall » Tue Jun 30, 2015 8:43 am
Hi, I have been trying to reproduce Lubik and Schorfheide's 2007 paper.
Last edited by earsmall on Mon Sep 14, 2015 8:23 pm, edited 1 time in total.
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Re: strange condition in Lubik and Schorfheide (2007)
by sfking » Wed Jul 01, 2015 9:26 am
The home country's CPI is defined as
P_t=(1-alpha)*P_ht+alpha*P_ft
=(1-alpha)*(P_ht-P_ft)+P_ft
=(1-alpha)*q_t+P_ft (1)
because GM2005 is small open economy model, then we have
P_ft=e_t+Pstar_t (2)
Substituting (2) into (1), and taking the first order differnce of (1)
Pi_t=(1-alpha)*Dq_t+De_t+Pistar_t
Woule you like to post your mod file? thank you
P_t=(1-alpha)*P_ht+alpha*P_ft
=(1-alpha)*(P_ht-P_ft)+P_ft
=(1-alpha)*q_t+P_ft (1)
because GM2005 is small open economy model, then we have
P_ft=e_t+Pstar_t (2)
Substituting (2) into (1), and taking the first order differnce of (1)
Pi_t=(1-alpha)*Dq_t+De_t+Pistar_t
Woule you like to post your mod file? thank you
- sfking
- Posts: 6
- Joined: Thu Nov 13, 2014 7:04 am
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