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Calibration for the Philippines

Parameters	Value	Description
$ξ_{J}, J = T H, N$	1	Capital–labor elasticity of substitution for domestic tradables and nontradables production; default value in GIMF
$ξ_{A}$	0.5	Tradable–nontradable elasticity of substitution; default value in GIMF
$η$	0.5	Share of LIQ households; set relatively high as typical in emerging markets and low-income countries
$α_{G 1}$	0.1	Elasticity of output to public capital; more conservative than Bom and Ligthart's (2014) estimate of all public capital (0.122) and core infrastructure capital (0.17), which was used in IMF (2014)
$δ_{G 1}$	0.04	Depreciation rate of public capital; default value in GIMF
$β_{1}$		Endogenously derived as $β_{1} = - \frac{β_{2}}{{(B limit - \frac{\bar{B}}{\bar{G D P}})}^{β_{3}}}$ so that $log (1 + p r e m i u m_{t}) = 0$ at steady state
$β_{2}$	−0.0003	Slope of sovereign debt premium function; lower than Peiris (2015) estimate of 0.0005–0.0006 to account for recent improvements in fiscal management
$β_{3}$	−1	Curvature of sovereign debt premium function; −1 implies linearity
$B limit$	80	Upper limit for public debt-to-GDP ratio; higher than historical maximum
$\bar{b s s}$	45	Steady-state public debt-to-GDP ratio
$\bar{g s s}$	−2	Steady-state overall fiscal balance-to-GDP ratio

Parameters	Value	Description
$ξ_{J}, J = T H, N$	1	Capital–labor elasticity of substitution for domestic tradables and nontradables production; default value in GIMF
$ξ_{A}$	0.5	Tradable–nontradable elasticity of substitution; default value in GIMF
$η$	0.5	Share of LIQ households; set relatively high as typical in emerging markets and low-income countries
$α_{G 1}$	0.1	Elasticity of output to public capital; more conservative than Bom and Ligthart's (2014) estimate of all public capital (0.122) and core infrastructure capital (0.17), which was used in IMF (2014)
$δ_{G 1}$	0.04	Depreciation rate of public capital; default value in GIMF
$β_{1}$		Endogenously derived as $β_{1} = - \frac{β_{2}}{{(B limit - \frac{\bar{B}}{\bar{G D P}})}^{β_{3}}}$ so that $log (1 + p r e m i u m_{t}) = 0$ at steady state
$β_{2}$	−0.0003	Slope of sovereign debt premium function; lower than Peiris (2015) estimate of 0.0005–0.0006 to account for recent improvements in fiscal management
$β_{3}$	−1	Curvature of sovereign debt premium function; −1 implies linearity
$B limit$	80	Upper limit for public debt-to-GDP ratio; higher than historical maximum
$\bar{b s s}$	45	Steady-state public debt-to-GDP ratio
$\bar{g s s}$	−2	Steady-state overall fiscal balance-to-GDP ratio

GDP = gross domestic product, GIMF = Global Integrated Monetary and Fiscal, IMF = International Monetary Fund, LIQ = liquidity constrained.

Sources: Kumhof, Michael, Douglas Laxton, Dirk Muir, and Susanna Mursula. 2010. “The Global Integrated Monetary and Fiscal Model (GIMF)—Theoretical Structure.” IMF Working Paper No. 10/34; International Monetary Fund. 2014. World Economic Outlook, October 2014, Chapter 3. Washington, DC; and author's calculations.

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