deterministic vs stochastic?

This forum is closed. You can read the posts but cannot write. We have migrated the forum to a new location where you will have to reset your password.
Forum rules
This forum is closed. You can read the posts but cannot write. We have migrated the forum to a new location (https://forum.dynare.org) where you will have to reset your password.

deterministic vs stochastic?

Postby Peterpierre » Tue May 20, 2008 2:26 am

what is the difference between solving with Dynare:

1. a stochastic model linearized to the first order (ie, certainty equivalence so the expectation of the shocks is zero and their variance is irrelevant to compute the policy functions) then simulating the impulse response (ie, the reaction to a one time shock)

2. solving a deterministic model that starts in the steady state of the previous model and has a transitory shock lasting only the first period (ie, the model converges to the same Steady state)

why the two methods should not give the same Impulse Response?

Thanks a lot
Peterpierre
 
Posts: 28
Joined: Tue Apr 22, 2008 6:17 pm

Return to Dynare help

Who is online

Users browsing this forum: No registered users and 6 guests