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We propose a systematic procedure for constructing effective models of strongly correlated materials. The parameters, in particular the on-site screened Coulomb interaction , are calculated from first principles, using the random-phase approximation. We derive an expression for the frequency-dependent and show, for the case of nickel, that its high-frequency part has significant influence on the spectral functions. We propose a scheme for taking into account the energy dependence of , so that a model with an energy-independent local interaction can still be used for low-energy properties.