Exchange Rate Policy and Heterogeneity in SOE

Replication code for "Exchange Rate Policy and Heterogeneity in Small Open Economies"

This folder contains notebooks, pictures, results, and a data table.

Notebooks with building blocks:

• setup.ipynb: defines functions and structures
• fill_grids_parameters.ipynb: constructs parameter storage files parameters.jld2, external_parameters.jld2, external_parameters_equal.jld2, and external_parameters_switched.jld2

Notebooks with computations:

• compute_steady_state.ipynb: uses parameters.jld2 to compute the steady state and save steady-state objects
  • options include setting the productivity gap between the sectors to "baseline", "equal", and "switched", which use external_parameters.jld2, external_parameters_equal.jld2, and external_parameters_switched.jld2 respectively
  • these options generate respective files with steady-state objects: steady_state_output.jld2, steady_state_output_equal.jld2, and steady_state_output_switched.jld2
• compute_transition.ipynb: uses storage files with the steady-state objects to compute the transition dynamics
  • options include setting elasticities, setting the slope of the Phillips curve, setting the exchange rate regime, setting the fiscal regime
  • these options generate storage files with the resulting time series in the folder transition_results
• compute_TSRANK.ipynb: uses steady-state objects to calibrate the two-sector RANK model and compute the transition dynamics
  • storage files with the resulting time series are in the folder transition_results

Notebooks for plots and tables:

• plot_steady_state.ipynb: plots Figure 1 in the paper
• basic_IRF.ipynb: plots Figure 2 in the paper
• response_decomposition.ipynb: plots Figure 3 in the paper
• variance_decomposition.ipynb: computes entries for Table 2 in the paper
• welfare_gains.ipynb: plots Figure 4 in the paper
• elasticities_IRF.ipynb: plots Figure 5 in the paper
• alternative_rules.ipynb: plots Figure 7 in the paper
• alternative_rules_elasticities.ipynb: plots Figure 8 in the paper
• alternative_IRF.ipynb: plots Figures A.1 through A.10 in the Appendix
• fiscal_IRF.ipynb: plots Figure A.11 in the Appendix

The folder graphs contains these figures. Figure 6 and Table 1 in the paper are made by hand.

The file aggregate_data.xlsx contains the aggregate series used for calibration.