******************************************************************************
Filename    : README.txt
Description : This text file contains the description of programs accompanying
              the paper "Fiscal Policy and Default Risk in Emerging Markets"
              by Gabriel Cuadra, Juan M. Sanchez and Horacio Sapriza
******************************************************************************

******************************************************************************
Structure of this folder
******************************************************************************

The structure of the directory is the following:
(1) Baseline
    (1.1) BaselineMX.m
    (1.2) functionB.m
    (1.3) functionB_default.m
    (1.4) simulationMXB.m
    (1.5) hpfilter.m
(2) CES
    (2.1) CESMX.m
    (2.2) simulationMXCES.m
(3) LaborTax
    (3.1) MXLaborTax.m
    (3.2) function_LT.m
    (3.3) function_default_LT.m
    (3.4) simulationMXLT.m
(4) Private Borrowing
    (4.1) 2period.cpp
    (4.2) income.txt
    (4.3) transition2.txt
(5) Without Default
    (5.1) WDMX.m
    (5.2) function WD.m
    (5.3) simulationWDMX.m
(6) Data
    (6.1) Data

**************************************************************************
Comments on folders and their contents
**************************************************************************

Baseline folder contains programs to solve the baseline model of the paper.The matlab file Baseline solves the baseline model, it uses the files functionB and functionB_default to calculate the tax policies. The file baseline produces a file with the policies. The file simulationMXB uses these policies and the file hpfilter to compute the statistics of the model.

CES folder contains programs to solve the model with CES preferences.The matlab file CESMX solves the model with CES preferences. The file CES produces a file with the policies. The file simulationMXCES uses these policies and the file hpfilter to compute the statistics of the model.

LaborTax folder contains programs to solve the model with labor tax. The matlab file MXLaborTax solves the model with labor tax, it uses the files function_LT and function_default_LT to calculate the tax policies. The file MXLaborTax produces a file with the policies. The file simulationMXLT uses these policies and the file hpfilter to compute the statistics of the model.

Private Borrowinf folder contains programs to solve the model with private borrowing. The file 2period.cpp uses the transition matrix in transition2.txt and income.txt. It produces two files, one with the policy function and another with the time seris. It was compiled with Microsoft Visual Studio 2008, and it requires only the standard library.

Without default folder contains programs to solve the model without default. The matlab file WDMX solves the model without default, it uses the file functionWD to calculate the tax policies. The file WDMX produces a file with the policies. The file simulationWDMX uses these policies and the file hpfilter to compute the statistics of the model.

Data folder contains an excel file with quarterly data for the mexican economy.

If you have any question regarding the programs, please feel free to contact Gabriel Cuadra (gcuadra@banxico.org.mx)

********************************************************************************
end of the file
********************************************************************************