Dynare forums

When we estimate DSGE models, sometimes we use some parameters to compute the other, for exampl, the values at steady state are used as paramters in the linearized model but they are computed by other structural variable.

For example, if I write the following in dynare

var x y z;
parametere beta n_ss r_ss pi_ss;
beta=.99;
r_ss=1/.99;

model;
.......
end;
estim_params
beta,beta_pdf,.99,.1;
end;
estimation

Would Dynare alternate the value of r_ss when the value of beta changes during iteration process ?

No Dynare won't update r_ss consistently with beta except if you declare a macro in the model block. For example, your model block will look like:

model;
#r_ss = 1/beta ;

...

x = r_ss*x(-1);

end;

The sign # is used to declare the macro r_ss (which is not declared as a parameter in the model).

Best,
Stéphane.