Skip to Main Content
Calibration for the Philippines
ParametersValueDescription
ξJ,J=TH,N Capital–labor elasticity of substitution for domestic tradables and nontradables production; default value in GIMF 
ξA 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 
αG1 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) 
δG1 0.04 Depreciation rate of public capital; default value in GIMF 
β1  Endogenously derived as β1=-β2Blimit-B¯GDP¯β3 so that log(1+premiumt)=0 at steady state 
β2 −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 
β3 −1 Curvature of sovereign debt premium function; −1 implies linearity 
Blimit 80 Upper limit for public debt-to-GDP ratio; higher than historical maximum 
bss¯ 45 Steady-state public debt-to-GDP ratio 
gss¯ −2 Steady-state overall fiscal balance-to-GDP ratio 
ParametersValueDescription
ξJ,J=TH,N Capital–labor elasticity of substitution for domestic tradables and nontradables production; default value in GIMF 
ξA 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 
αG1 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) 
δG1 0.04 Depreciation rate of public capital; default value in GIMF 
β1  Endogenously derived as β1=-β2Blimit-B¯GDP¯β3 so that log(1+premiumt)=0 at steady state 
β2 −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 
β3 −1 Curvature of sovereign debt premium function; −1 implies linearity 
Blimit 80 Upper limit for public debt-to-GDP ratio; higher than historical maximum 
bss¯ 45 Steady-state public debt-to-GDP ratio 
gss¯ −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.

Close Modal

or Create an Account

Close Modal
Close Modal