%STRUCTURAL_PARAMETERS.M
function [DELTA, SIGMA, GAMA, NUH, BETTA, THETA, NUF, ALFA, ETA, CHI, GBAR, PSSI, RHOG, STD_EPSG, RHOZ, STD_EPSZ] = structural_parameters; 
%This program produces the deep structural parameters  of the model described in ``Optimal, Simple, and Implementable Monetary and Fiscal Rules,' by Stephanie Schmitt-Grohe and Martin Uribe. 
%(c) Stephanie Schmitt-Grohe and Martin Uribe, March 30, 2006

%Calibration restrictions

TAUL = 0; %Lump-sum taxes 

PAI = 1.042^(1/4); %Steady-state inflation

SIGMA = 2; %intertemporal elasticity of substitution

DELTA = 1.1^(1/4)-1;%Depreciation Rate

BETTA = 1.04^(-1/4); %Subjective discount factor

ETA = 5; %Elasticity of demand for each variety

THETA = 0.3; %Capital Share

ALFA = 0.8;%2/3; %Probability of not being able to change the price next period

SM = 0.17 * 4; %money-to-gdp ratio, qtr

SG = 0.17; % Steady State Share of Government Purchases

H = 0.2; % Steady state level of hours

SMF = 2/3; %Fraction of money held by firms

SB = 0.42 * 4; %Debt-to-GDP ratio, qtr

PSSI = 2.48; %Adjustment cost parameter

RHOG = 0.87; %Serial correlation of government purchases

STD_EPSG = 0.016; %Standard deviation of innovation to government purchases


RHOZ = 0.8556; %Serial correlation of productivity shocls

STD_EPSZ = 0.0064; %Standard deviation of innovation to productivity shocks

%Implied Parameters and Steady-State Values of Endogenous Variables

PTIL = ((1-ALFA * PAI^(-1+ETA)) / (1 - ALFA))^(1/(1-ETA));


R = PAI / BETTA; %Nominal interest rate (gross qtr)

MC = (ETA-1) / ETA * (1-ALFA * BETTA * PAI^ETA ) / (1 - ALFA * BETTA * PAI^(ETA-1)) * PTIL;

TAUD = -(SB + SM/R ) * (1- R/PAI) - SM * (1-1/R) + SG; %Income tax rate

KAPA = ((1/BETTA + DELTA -1) / ((1-TAUD) * MC * THETA))^(1/(THETA-1)); %Capital-labor ratio

K = KAPA * H; %Capital stock

S = ((1-ALFA) * PTIL^(-ETA)) / (1-ALFA * PAI^ETA); %Price distortion

U = (1 / BETTA + DELTA -1 - DELTA * TAUD) / (1-TAUD); %Rental rate of capital

OUTPUT = U*K + H*MC * (1-THETA) * KAPA^THETA; %Output

M = SM * OUTPUT; %Money

G = SG * OUTPUT; %Government purchases

L = SB * R * OUTPUT + M; %Total Government Liabilites

NUF = SMF * M / (MC * (1-THETA) * KAPA^THETA *H- SMF * M * (1-1/R)); %Share of wage bill subject to a working capital constraint

CHI = KAPA^THETA * H - S * OUTPUT; %Fixed cost

W = (MC * (1-THETA) * KAPA^THETA) / (1+NUF * (1-1/R)); %Wage rate

IV = DELTA * K; %Investment

C = OUTPUT - IV - G; %Consumption

NUH = (M-NUF * W *H) / C; %Fraction of consumption subject to a cash-in-advance constraint

GAMA = (1-H) / C * W * (1-TAUD) / (1+NUH * (1-1/R)); %Exponent on leisure in utility function

X1 = (PTIL^(-1-ETA) * OUTPUT *MC) / (1- ALFA * BETTA * PAI^ETA); %Present discounted value of marginal reveneus

X2 = ETA / (ETA-1) * X1; %Present discounted value of marginal costs

LA = C^(-SIGMA) * (1-H)^(GAMA*(1-SIGMA)) / (1+NUH * (1-1/R)); %Marginal utility of consumption

TAU = TAUL + TAUD * OUTPUT; %Total tax revenue

GBAR = G; %Parameter of government spending process

PSSI = 0;

%For the cashless economy
%NUF=0;
%NUH=0;