Dynare forums

could you help me to write this equation in dynare, i have made an adjustment cost fucntion like these of baxter and crucini(1993):

Kt+1 = (1-δ)kt + Ф(it/kt)kt

at the steday state;
Ф(it/kt) = i/k
Ф'(it/kt) = 1
and i/k = δ



thanks
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You need to find a cost specification that has the appropriate derivative and other characteristics. A quadratic function should do. You need to find the correct value for the parameters

Best

Michel