Table B4: Parameter description and estimation

|Parame|ter Description|Prior|Prior|Prior|Posterior|90%<br>HPD|
|---|---|---|---|---|---|---|
|||dist.|mean|std.|mean|interval|
|Househ|olds||||||
|_κ_|Consumption habit persistence|_B_|0.7|0.05|0.62|[0_._54_,_0_._71]|
|_ρ_|Inverse elast. of intertemp. subst.|_G_|1.5|0.375|1.08|[0_._70_,_1_._49]|
|_η_|Inverse Frisch elast. of labor supply|_G_|2|0.25|1.73|[1_._33_,_2_._09]|
|Elastici|ties of substitution in CES functions between||||||
|_σZ_|Value added & energy for core goods frms|_G_|0.5|0.1|0.75|[0_._65_,_0_._85]|
|_σL_|High & low skilled labor for labor services|_G_|1.5|0.5|2.94|[2_._66_,_3_._20]|
|_σY_|Core goods & energy for retail frms|_G_|0.3|0.1|0.14|[0_._07_,_0_._20]|
|_σF_|Value added & carbon for fossil energy frms|_G_|0.3|0.1|0.05|[0_._03_,_0_._07]|
|_σVR_|Capital & labor for renew. energy frms|_G_|0.3|0.05|0.30|[0_._22_,_0_._39]|
|_σVF_|Capital & labor for fossil energy frms|_G_|0.3|0.05|0.28|[0_._20_,_0_._35]|
|_σW_|Dom. & RoW core goods for wholesale frms|_G_|2|0.4|1.57|[1_._45_,_1_._68]|
|_σW ∗_|RoW & dom. core goods for RoW wholesale frms|_G_|2|0.4|1.31|[0_._82_,_1_._82]<br>|
|_σE_|Renew. & fossil energy for energy frms|_G_|6|4|18.51|[10_._12_,_26_._56]|
|Scaling|parameters||||||
|_ψu_|Scaling parameter for capacity utilization rate|_N_|2|1|2.68|[1_._69_,_3_._74]|
|Adjust|ment cost scaling parameters||||||
|_τW_|Quadratic high-skilled wage adjustment costs|_G_|50|20|92.86|[56_._78_,_128_._61]|
|_τP_|Quadratic core good price adjustment costs|_G_|50|20|59.90|[36_._26_,_83_._11]|
|_τI_|Quadratic investment adjustment costs|_G_|10|4|4.49|[2_._84_,_6_._39]|
|_τZ_2|Quadratic capital utilization costs|_G_|0.5|0.1|0.34|[0_._20_,_0_._47]|
|_τO_|Quadratic carbon input adjustment costs|_G_|5|1|3.29|[2_._21_,_4_._33]|
|_τZe_|Quadratic export adjustment costs<br>|_G_<br>|5|1|4.33|[2_._95_,_5_._70]<br>|
|_τE_|Quadratic renew. adjustment costs|_G_|2|1.25|0.80|[0_._13_,_1_._48]|
|Adjust|ment elasticities||||||
|_ξEL_|Calvo-style employment parameter|_B_|0.5|0.15|0.96|[0_._95_,_0_._97]|
|_φWE_|Empl. elast. of low-skilled wage inf.|_N_|1|0.5|1.29|[0_._74_,_1_._82]|
|_φWP_|Price inf. elast. of low-skilled wage inf.|_N_|1|0.5|0.67|[0_._24_,_1_._10]|
|_φCY_|Output gap elast. of gov. cons.|_N_|0|0.1|-0.12|[_−_0_._24_,_0_._02]|
|_φR_Π|Core inf. elast. of policy rate|_N_|1.1|0.2|1.22|[1_._01_,_1_._42]|
|_φRY_|Output gap elast. of policy rate|_N_|0.5|0.2|0.02|[_−_0_._05_,_0_._09]|
|Persiste|nce parameters||||||
|_ρWD_|Domestic input productivity shock for wholesale frms|_B_|0.5|0.1|0.75|[0_._67_,_0_._82]|
|_ρWI_|Imported input productivity shock for wholesale frms|_B_|0.5|0.1|0.76|[0_._67_,_0_._85]|
|_ρW ∗_|Export demand shock for RoW wholesale frms|_B_|0.5|0.1|0.29|[0_._18_,_0_._41]|
|_ρR_|Interest rate smoothing of the home country|_B_|0.8|0.1|0.90|[0_._88_,_0_._92]|
|_ρC_|Consumption preference shock|_B_|0.5|0.1|0.32|[0_._20_,_0_._45]|
|_ρNH_|High-skilled labor supply preference shock|_B_|0.5|0.1|0.40|[0_._27_,_0_._53]|
|_ρNL_|Low-skilled labor supply preference shock|_B_|0.5|0.1|0.45|[0_._35_,_0_._56]|
|_ρRB_|Flight to safety shock|_B_|0.5|0.1|0.53|[0_._45_,_0_._62]|
|_ργW_|Foreign bond risk premium shock|_B_|0.5|0.1|0.65|[0_._55_,_0_._76]|
|_ρRS_|Equity risk premium shock|_B_|0.5|0.1|0.46|[0_._33_,_0_._57]|
|_ρPZ_|Core good price mark up shock|_B_|0.5|0.1|0.66|[0_._55_,_0_._77]|
|_ρVZ_|Productivity shock for core goods frms|_B_|0.5|0.1|0.69|[0_._56_,_0_._81]|
|_ρZE_|Energy efciency shock to core goods frms|_B_|0.5|0.1|0.75|[0_._64_,_0_._86]|
|_ρVF_|Productivity shock for fossil energy frms|_B_|0.5|0.1|0.67|[0_._56_,_0_._78]|

_Notes_ : RoW stands for the rest of the world. Data sources reported in the main text.

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