A B C D E F G H 1 2 J K L M N P Baseline parameters R S T U V Period Productivity shock household demand shock mark up shock Government spending shock monetary policy shock Productivity (a) household demand (mu) mark up (theta) Government spending (g) monetary policy (v) disturbance to demand function (d) disturbance private to supply function (s) output (y) consumption ( hours worked (I) real wage (w) c) quarterly quarterly nominal inflation interest minus rate target minus trend quarterly real interest rate minus trend actual quarterly real interest rate actual quarterly inflation (pi) 6 0.2 G/Y 7 30 eta/Y 8 0.99 betal ss government spending as a fraction of output (between 0 and 1) cost of adjusting prices positive discount factor in utility function (between zero and one) 0.0008 0.2 30 0.0007 0.99 0.0006 intertemporal elasticity of subsitution 9 1 sigma 1 10 5.5 phi weight on leisure in the utility function (greater than zero) 0.0005 5.5 0.0004 11 2 psi the Frisch elasticity of labour supply (greater than zero, the macro evidence suggests greater than 1, the micro evidence suggests less than 1) 0.0003 2 12 0.5 ay taylor rule weight on output (greater than zero) 0.0002 0.5 taylor rule weight on inflation (greater than 0.0001 13 0.5 api zero) 0.5 14 0.005 pi steady state inflation 0.005 15 6 theta elasticity of substitution between goods persistence of shocks (between zero and one, 6 0 -disturbance to demand function (d) -disturbance to supply function (s) 16 0.9 rho including zero but not one) 0.9 17 18 Steady state values (do not change) 19 0.015152 nominal interest rate 20 0.329964 labour 0.015151515 0.329964396 quarterly