gemStickyDecisionPath_2_2 {GE}

An Example Illustrating the Sticky-Decision Path and Business Cycles

Description

This is an 2-by-2 example that illustrates the sticky-decision path and business cycles. Assume that the consumer has a linear utility function x1 + 0.8 * x2.

Usage

gemStickyDecisionPath_2_2(...)

Arguments

...

arguments to be passed to the function sdm2.

Examples

stickiness <- 0.1 # 0.5
ge <- sdm2(
  A = function(state) {
    a.firm <- CD_A(alpha = 2, Beta = c(0.5, 0.5), state$p)
    if (1.25 * state$p[2] < state$p[1]) {
      a.consumer <- c(0, 1)
    } else {
      a.consumer <- c(1, 0)
    }

    a.consumer <- state$last.A[, 2] * stickiness + a.consumer * (1 - stickiness)
    cbind(a.firm, a.consumer)
  },
  B = matrix(c(
    1, 0,
    0, 0
  ), 2, 2, TRUE),
  S0Exg = matrix(c(
    NA, NA,
    NA, 100
  ), 2, 2, TRUE),
  names.commodity = c("prod", "lab"),
  names.agent = c("firm", "laborer"),
  numeraire = "prod",
  z0 = c(80, 100),
  maxIteration = 1,
  numberOfPeriods = 100,
  ts = TRUE
)

matplot(ge$ts.z, type = "o", pch = 20)