Parameter Tuning for Baseline

The model developed in Chaps. 2 and 3 has many parameters (33 in total). Hence, a simulation with arbitrarily chosen parameters will generate highly erratic behaviors of agents. This chapter discusses how the baseline values of the model variables and parameters, listed in Tables 5.1 and 5.2, were chosen. Section 5.1 reports some results of parameter tuning using surrogate models. Section 5.2 presents some bivariate sensitivity results on nominal wage–price rigidity, β w and β p, while fixing other parameters at their baseline values. Table 5.1 The variables of the model Symbol Description Initial valuea A $$\mathcal {A}$$ Net wealth −b A L $$\mathcal {A}^L$$ Liquid asset − B Outstanding bank bonds θ B ( L 0 ℓ + L 0 c ) c $$\theta _B(L^{\ell }_0+L^c_0)^{\mathrm {c}}$$ C Real consumption spending − Dep Depreciation cost − Div Dividend of firm 0.0 Div B Dividend of the bank − E f Firm f’s equity (capital) − E B Bank equity (capital) M G $$M_{\mathcal {G}}$$ E G $$E^{\mathcal {G}}$$ Government equity (