Replication Files for
"Implications of Labor Market Frictions for Risk Aversion and Risk Premia"
by Eric T. Swanson
American Economic Journal of Macroeconomics, 2019

Files included along with this README:
perturbationAIM.m
lsearchmodel.m
lsearchmodelez.m


These files replicate the numerical results in the paper, reported in Figure 1, using the calibrated parameter
values in Table 1.

The model is solved using the Perturbation AIM software package, described in detail in Swanson, Anderson, and
Levin (2006), and available on Eric Swanson's website.  The file perturbationAIM.m, included with this README file,
is version 2.8.3.  This version was used to compute all of the numerical results in Figure 1.

PerturbationAIM is written in Mathematica, and the results in the paper were computed using Mathematica 11.1 on a
standard laptop PC.  From a Mathematica command prompt, change directory to the one in which the above files are
located, and then load Perturbation AIM:
<<perturbationAIM.m

Typing in
<<lsearchmodel.m
will then load and solve the expected utility version of the model, under the baseline parameterization in Table 1.

Typing in
<<lsearchmodelez.m
will load and solve the Epstein-Zin version of the model, under the baseline parameterization in Table 1.

The solution for alternative parameterizations of the model can be computed by editing the two model files,
lsearchmodel.m and lsearchmodelez.m, and re-running them as above.

There are explanatory comments in each of the two model files that provide further insight into how the models are
set up and solved.


Eric Swanson
April 2019



