An Estimated DSGE Model of the Indian Economy.

varies rw. If we take reln = 0.2 we have three possibilities to hit this value: for αF = 0.6,
relY = 1.0 and rw = 0.75; for αF = 0.5 either relY = 1.0 and rw = 0.47 or relY = 1.5
and rw = 0.9. In the estimation we choose priors of rw = 0.75, rel_Y = 1.0, α_F = 0.6 and
αI = 0.8.

Figure 2: Calibration of rw to fit reln. αF = 0.6

Figure 3: Calibration of rw to fit reln. αF = 0.5

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