Macroeconomic Interdependence in a Two-Country DSGE Model under Diverging Interest-Rate Rules



A. Appendix

A.6. Dynare Program Code for Matlab

periods 1000;

var x_d x_f pi_d pi_f t i_d i_f a_d a_f u_d u_f v_d v_f;

varexo e_af e_ad e_ud e_uf e_vd e_vf;

parameters ALPHA_D ALPHA_F MU_D MU_F OMEGA_D OMEGA_F THETA_D THETA_F IOTA_F XI RHO

BETA ZETA_AD ZETA_AF ZETA_UD ZETA_UF ZETA_VD ZETA_VF PHI_AD PHI_AF;

ALPHA_D=1.5;

ALPHA_F=1.5;

MU_D=.16;

MU_F=.16;

OMEGA_D=.1;

OMEGA_F=.1;

THETA_D=.07;

THETA_F=-.07;

IOTA_F=.5;

XI=-1;

RHO=.8;

BETA=.97;

ZETA_AD=.8;

ZETA_AF=.8;

ZETA_UD=.8;

ZETA_UF=.8;

ZETA_VD=.8;

ZETA_VF=.8;

PHI_AD=.3;

PHI_AF=.3;

model;

x_d=x_d(+1)+1/RHO*pi_d(+1)-1/RHO*i_d+THETA_D*t(+1)+(XI-1)/(XI-RHO)*a_d(+1)-(XI-1)/(XI-RHO)*a_d;

x_f=x_f(+1)+1/RHO*pi_f(+1)-1/RHO*i_f+THETA_F*t(+1)+(XI-1)/(XI-RHO)*a_f(+1)-(XI-1)/(XI-RHO)*a_f;

pi_d=BETA*pi_d(+1)+MU_D*x_d+u_d;

pi_f=BETA*pi_f(+1)+MU_F*x_f+u_f;

t=pi_f-pi_d+i_d(-1)-i_f(-1);

i_d=ALPHA_D*pi_d+OMEGA_D*i_d(-1)+v_d;

i_f=IOTA_F*x_f+ALPHA_F*pi_f+OMEGA_F*i_f(-1)+v_f;

a_d=ZETA_AD*a_d(-1)+PHI_AD*a_f+e_ad;

a_f=ZETA_AF*a_f(-1)*PHI_AF*a_d+e_af;

u_d=ZETA_UD*u_d(-1)+e_ud;

u_f=ZETA_UF*u_f(-1)+e_uf;

v_d=ZETA_VD*v_d(-1)+e_vd;

v_f=ZETA_VF*v_f(-1)+e_vf;

end;

initval;

x_d=0;

x_f=0;

pi_d=0;

pi_f=0;

t=0;

i_d=0;

i_f=0;

a_d=0;

a_f=0;

u_d=0;

35



More intriguing information

1. Institutions, Social Norms, and Bargaining Power: An Analysis of Individual Leisure Time in Couple Households
2. What Lessons for Economic Development Can We Draw from the Champagne Fairs?
3. Julkinen T&K-rahoitus ja sen vaikutus yrityksiin - Analyysi metalli- ja elektroniikkateollisuudesta
4. The name is absent
5. The name is absent
6. AN IMPROVED 2D OPTICAL FLOW SENSOR FOR MOTION SEGMENTATION
7. The name is absent
8. On the Relation between Robust and Bayesian Decision Making
9. Climate change, mitigation and adaptation: the case of the Murray–Darling Basin in Australia
10. Regional Intergration and Migration: An Economic Geography Model with Hetergenous Labour Force