gemCanonicalDynamicMacroeconomic_TimeCircle_2_2: A Canonical Dynamic Macroeconomic General Equilibrium Model in Time-circle Form (see Torres, 2016)

Description

A canonical dynamic macroeconomic general equilibrium model in time-circle form (see Torres, 2016, Table 2.1 and 2.2).

Usage

gemCanonicalDynamicMacroeconomic_TimeCircle_2_2(
  alpha.firm = rep(1, 3),
  es.prod.lab.firm = 1,
  beta.prod.firm = 0.35,
  depreciation.rate = 0.06,
  eis = 1,
  Gamma.beta = 0.97,
  beta.prod.consumer = 0.4,
  es.prod.lab.consumer = 1,
  gr = 0,
  wage.payment = "post",
  ...
)

Value

A general equilibrium (see sdm2).

Arguments

alpha.firm: a positive vector, indicating the efficiency parameters of the firm for each economic period. The number of economic periods will be set to length(alpha.firm) .
es.prod.lab.firm: the elasticity of substitution between product and labor in the production function of the firm.
beta.prod.firm: the share parameter of the product in the production function.
depreciation.rate: the physical depreciation rate of capital stock.
eis: the elasticity of intertemporal substitution of the consumer.
Gamma.beta: the subjective discount factor of the consumer.
beta.prod.consumer: the share parameter of the product in the period utility function.
es.prod.lab.consumer: the elasticity of substitution between product and labor in the CES-type period utility function of the consumer.
gr: the growth rate of the labor supply.
wage.payment: a character string specifying the wage payment method, must be one of "pre" or "post".
...: arguments to be passed to the function sdm2.

References

Torres, Jose L. (2016, ISBN: 9781622730452) Introduction to Dynamic Macroeconomic General Equilibrium Models (Second Edition). Vernon Press.

Examples

Run this code

# \donttest{
#### Take the wage postpayment assumption.
ge <- gemCanonicalDynamicMacroeconomic_TimeCircle_2_2()
np <- 3
eis <- 1
Gamma.beta <- 0.97
gr <- 0
ge$p
growth_rate(ge$p[1:np])
1 / (1 + sserr(eis = eis, Gamma.beta = Gamma.beta, gr = gr)) - 1
ge$z
growth_rate(ge$z[1:np])
ge$D
ge$S

##  Take the wage postpayment assumption.
eis <- 0.8
Gamma.beta <- 0.97
gr <- 0.03
ge <- gemCanonicalDynamicMacroeconomic_TimeCircle_2_2(
  es.prod.lab.firm = 0.8,
  eis = eis, Gamma.beta = Gamma.beta, es.prod.lab.consumer = 0.8,
  gr = gr
)

ge$p
growth_rate(ge$p[1:np])
1 / (1 + sserr(eis = eis, Gamma.beta = Gamma.beta, gr = gr)) - 1
ge$z
growth_rate(ge$z[1:np])
ge$D
ge$S

#### an anticipated technology shock.
## Warning: Running the program below takes about 4 minutes.
# np <- 120
# alpha.firm <- rep(1, np)
# alpha.firm[40] <- 1.05
# ge <- gemCanonicalDynamicMacroeconomic_TimeCircle_2_2(alpha.firm = alpha.firm)

## The steady state product supply is 343.92.
## the (economic) time series of product supply
# plot(ge$z[1:np] / 343.92 - 1, type = "o", pch = 20)
## The steady state product consumption is 57.27.
## the (economic) time series of product consumption
# plot(ge$D[2:np, np + 1] / 57.27 - 1, type = "o", pch = 20)

#### Take the wage prepayment assumption.
ge <- gemCanonicalDynamicMacroeconomic_TimeCircle_2_2(wage.payment = "pre")
np <- 3
eis <- 1
Gamma.beta <- 0.97
gr <- 0
ge$p
growth_rate(ge$p[1:np])
1 / (1 + sserr(eis = eis, Gamma.beta = Gamma.beta, gr = gr)) - 1
ge$z
growth_rate(ge$z[1:np])
ge$D
ge$S

##  Take the wage prepayment assumption.
eis <- 0.8
Gamma.beta <- 0.97
gr <- 0.03

ge <- gemCanonicalDynamicMacroeconomic_TimeCircle_2_2(
  es.prod.lab.firm = 0.8,
  eis = eis, es.prod.lab.consumer = 0.8,
  Gamma.beta = Gamma.beta, gr = gr,
  wage.payment = "pre"
)

ge$p
growth_rate(ge$p[1:np])
1 / (1 + sserr(eis = eis, Gamma.beta = Gamma.beta, gr = gr)) - 1
ge$z
growth_rate(ge$z[1:np])
ge$D
ge$S
# }

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