Yt = = 1. Abstracting from long-run growth by setting n = g = 0 nd from persistent shocks by setting PA = PG = 0, with = InA - In and G = InG - In, and normalizing the population to N = 1, the following nine equations describe the "baseline" RBC model in Chapter 5: Yt == C++ It +Gt K-1(A+Lt)-a Kt-1+ It - 8K+-1 (1) (2) (3) t = A,t (4) G = G,t (5) rt == a(AL/Kt-1)-8 (6) Wt = (1 - a)(Kt-1/AtLt) At 1 Ct == BE [(1+1+1)] (8) Ct 1 - Lt = Wt b (9) where e P. (a) Find the steady state for this economy under the following calibration: a = 1/3, 6 = 0.05, T = 0.025, A = 1, and L = 0.5 and G such that G/Y = 0.2. In particular, find the remaining parameter values b and p that are consistent with steady state and determine steady-state values for the endogenous variables, , , , , K, and w. (b) Log-linearize the seven equations above excluding equations (4) and (5) for and Gt. (c) Write a Dynare .mod file to simulate this economy. Assume that = PA-1+At and G = PGt-1 + G,t are the log-linearized shocks. Set a = 1/3, 8 = 0.05, PA = PG = .8, e P = 0.99, EA = = 1, and b = 1. Provide a graph of the impulse response of one standard deviation shock to technology and government spending. (Hint: This model is nearly identical to the one we went over in class. Rather than start from scratch try modifying the Dynare .mod I have provided on Canvas. Also, you need to use G/Y = 0.2 to figure out the steady parameter values needed to do your simulation.) (d) What is the effect of a positive government spending shock on the real wage? Explain.