# A Canonical Dynamic Macroeconomic General Equilibrium Model in Time-circle Form (see Torres, 2016) A canonical dynamic macroeconomic general equilibrium model in time-circle form (see Torres, 2016, Table 2.1 and 2.2). ```r 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", ... ) ``` ## 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. ## Returns A general equilibrium (see `sdm2`). ## Examples ```r #### 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 ``` ## References Torres, Jose L. (2016, ISBN: 9781622730452) Introduction to Dynamic Macroeconomic General Equilibrium Models (Second Edition). Vernon Press. ## See Also `gemCanonicalDynamicMacroeconomic_Timeline_2_2`, `gemDynamicMacroeconomic_SpotTrading_3_2`, `gemCanonicalDynamicMacroeconomic_Sequential_WagePostpayment_4_3`.

gemCanonicalDynamicMacroeconomic_TimeCircle_2_2 function