Households |
|
Share or Ricardian households | 1 – μ | 0.6 |
Discount factor | β | 0.99 |
Risk aversion | σc | 2 |
Habits in consumption | h | 0.85 |
Home bias | ψ; ψ* | 0.56; 0.03 |
|
Production |
|
Depreciation rate | δ | 0.025 |
Private capital share | α | 0.4 |
Public capital share | η | 0.015 |
Adjustment cost parameter | κI | 2.48 |
|
Labor market |
|
Separation rate (private; public sector) | sp; sg | 0.06; 0.03 |
Matching elasticity (private; public sector) | φp; φg | 0.5; 0.3 |
Bargaining power | ζ | 0.5 |
|
Price and wage stickiness |
|
Calvo parameter (prices) | θp | 0.75 |
Calvo parameter (existing wages) | θw | 0.8 |
Calvo parameter (new wages) | \theta _w^n | 0.7 |
Market power (mark-up) | ɛ | 6 |
|
Fiscal policy |
|
Smoothing parameters | ρj | 0 – 0.1 |
Persistence parameters | ρj | 0 – 0.85 |
Stances | Φj | 0 – 0.1 |
|
Monetary policy |
|
Interest rate smoothing | ρR | 0.9 |
Stance on inflation | Φπ | 1.5 |
Stance on output gap | Φy | 0.5 |
|
Trade in international bonds |
|
Risk premium parameter | \psi _2 = \psi _2^* | 0.01 |