This folder includes Dynare model files:

1. Three-country model without monetary union: threecountry_final_loop.mod
2. Three-country model with monetary union: threecountry_emu_final_loop.mod

The files produce all Figures 2-5 and the C-Figures in the Online Appendix.

We set the persistence of the bargaining power and matching efficiency shock to

low_rhoeta = 0.99; up_rhoeta = 0.99; 

For less persistent shocks the line needs to be changed to

low_rhoeta = 0.5; up_rhoeta = 0.99; 