16 pages, 5 figuresWe propose a systematic procedure for constructing effective models of strongly correlated materials. The parameters, in particular the on-site screened Coulomb interaction U, are calculated from first principles, using the GW approximation. We derive an expression for the frequency-dependent U and show that its high frequency part has significant influence on the spectral functions. We propose a scheme for taking into account the energy dependence of U, so that a model with an energy-independent local interaction can still be used for low-energy properties

A theory of the metal-insulator transition in vanadium dioxide from the high- temperature rutile to the low- temperature monoclinic phase is proposed on the basis of cluster dynamical mean-field theory, in conjunction with the density functional scheme. The interplay of strong electronic Coulomb interactions and structural distortions, in particular, the dimerization of vanadium atoms in the low-temperature phase, plays a crucial role. We find that VO2 is not a conventional Mott insulator, but that the formation of dynamical V-V singlet pairs due to strong Coulomb correlations is necessary to trigger the opening of a Peierls gap.