Master Thesis - Humboldt-Universität zu Berlin

y j t = min { }
(1 − ω − ζ) · v j t ; ω · Op j,t ; ζ · Mp
j,t − Φ (12)
with ɛ a t = ρ a ɛ a t−1 + η a t , with η w t an i.i.d. - Normal error term, where ɛ a t is a
productivity shock, ˜Kj,t the capital stock effectively utilised, L j,t an index of
various types of labour hired by the firm, and Φ a fixed cost introduced to
ensure zero profits in steady state. Variables Op Op
j,t and Mp
j,t are respectively
the oil and non-oil imported goods necessary for the production process.
Parameters ω and ζ represent their respective shares.
4.3 Final goods sector
The final good F t is produced by a representative ”consumption good distributor”
from the intermediate good Θ t and oil O f t following a Leontieff
technology with a fixed proportion θ of oil :
{
}
F t = min (1 − θ)Θ t ; θO f t
(13)
For the use in the production of final goods, the imports are combined with
domestic goods via a distribution channel:
M d t
{
}
= min (1 − ν)Dt d ; νM f t
(14)
The intermediate good combines domestically produced and the importedand-distributed
through a CES technology:
Θ t =
[µ ρ
1+ρ (D
d
t ) 1
1+ρ + (1 − µ)
ρ
1+ρ (Ωt M d t ) 1
1+ρ
] 1+ρ
(15)
13