Parameters

Value

Description

Source

$\beta$

0.9875

Discount factor

Verona et al. (2013)

${\psi }_L$

36

Weight on disutility of labor supply

Endogenous

${\sigma }_L$

1

Curvature of disutility of labor supply

Christiano et al. (2010)

b

0.63

Habit of consumption

Christiano et al. (2010)

${\xi }_{\omega }$

0.75

Stickiness of wage adjustment

Erceg et al. (2000) [16]

${\lambda }_{\omega }$

1.05

Markup, workers

Christiano et al. (2010)

${\iota }_{\omega }$

0.29

Weight of wage stickness to steady state

Christiano et al. (2010)

$\alpha$

0.36

Capital share in the production function

Levin et al. (2005) [17]

${\xi }_p$

0.75

Stickness of price adjustment

Erceg et al. (2000)

$\iota$

0.16

Weight of price stickness to steady state

Christiano et al. (2010)

${\lambda }_f$

1.2

Markup, intermediate good firms

Christiano et al. (2010)

$\psi$

29.3

Curvature of investment adjustment cost function

Christiano et al. (2010)

$\delta$

0.03

Depreciation rate on capital

Christiano et al. (2010)

$\rho$

0.6

Degree of substitutability between capital services

Verona et al. (2013)

${\sigma }_a^L$

18.9

Curvature of capital utilization cost functions of low-risk entrepreneurs

Christiano et al. (2010)

${\sigma }_a^H$

18.9

Curvature of capital utilization cost functions of high-risk entrepreneurs

Christiano et al. (2010)

$\mu$

0.15

Cost of monitoring the default contract

Verona et al. (2013)

$w^{e,L}$

0.02

Wealth transfer to the new entry

Christiano et al. (2010)

$w^{e,H}$

0.02

Wealth transfer to the new entry

Christiano et al. (2010)

${\gamma }^L$

0.96

Survival probability of low-risk entrepreneurs

Verona et al. (2013)

${\gamma }^H$

0.97

Survival probability of high-risk entrepreneurs

Verona et al. (2013)

$\eta$

0.3

Share of high-risk entrepreneurs

Verona et al. (2013)

${\epsilon }^{sb,c}$

510

Interest rate elasticity of the demand for funds

Chen et al. (2007) [18]

${\rho }_{\chi }$

0.9

Degree of persistence in optimism

Verona et al. (2013)

${\alpha }_{\chi }$

40

Sensitivity of optimism to entrepreneur’s net worth

Verona et al. (2013)

$\overline{\chi }$

0

The steady state value of optimism level

Verona et al. (2013)

${\tilde{\rho }}^{IR}$

0.88

Interest rate smoothing index

Christiano et al. (2010)

${\alpha }_{\pi }$

1.82

Weight of expected inflation in Taylor rule

Christiano et al. (2010)

${\alpha }_y$

0.11

Weight of output gap in Taylor rule

Christiano et al. (2010)