P. 1
Dynare Userguide

Dynare Userguide

|Views: 437|Likes:
Published by pnmcfarlane

More info:

Published by: pnmcfarlane on Jan 29, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

01/29/2012

pdf

text

original

Let’s illustrate this transformation on output, and leave the transformations

of the remaining equations as an exercise, if you wish (Nason and Cogley

(1994) includes more details on the transformations of each equation). We

stationarize output by dividing its real variables (except for labor) by At. We

define Yt to equal Yt/At and Kt as Kt/At. NOTE! Recall from section 3.5 in

chapter 3), that in Dynare variables take the time subscript of the period in

which they are decided (in the case of the capital stock, today’s capital stock

is a result of yesterday’s decision). Thus, in the output equation, we should

actually work with Kt1 = Kt1/At1. The resulting equation made up of

stationary variables is

Yt

At

=

Kt1
At1

α

A1α

t N1α

t A1

t Aα

t1

Yt = Kα

t1N1α
t

At
At1

α

= Kα

t1N1α

t exp(α(γ + A,t))

where we go from the second to the third line by taking the exponential of

both sides of the equation of motion of technology.

The above is the equation we retain for the .mod file of Dynare into which

we enter:

y=k(-1)^alp*n^(1-alp)*exp(-alp*(gam+e a))

The other equations are entered into the .mod file after transforming them

in exactly the same way as the one above. A final transformation to consider,

that turns out to be useful since we often deal with the growth rate of tech-

nology, is to define

dA = exp(gam+e a)

by simply taking the exponential of both sides of the stochastic process of

technology defined in the model setup above.

68 CHAPTER 6. ESTIMATING DSGE MODELS - ADVANCED TOPICS

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->