Dynare forums

Dear all,
I'm a novice at dynare. I can't understand why use the following equation to detrend in Smets and Wouters(2007).In my oppinion, the definition of ctrend in the second equation will amplfy the growth rate by 100times.:

cgamma=1.004;
ctrend=(cgamma-1)*100;
dy=y-y(-1)+ctrend;(dy is the log difference of GDP )

In the second equation, ctrend is defined as the growth rate in percentage(just 0.4). But as the third equation sugguests, ctrend should be just growth rate in real number(0.004).

Thank you very much for your kind help! ^_^

Yours, Bin

Dear Bin,

I undertand why you are concerned about the detrend, the code seems as if it is wrong, but we should make sore before we can say so. Could you post the Smets & Wouters (2007) code or link where to download it from. Then I can try to answer your question.

Best,
Pavel