Dynare forums

Hi,

I am a new user and running a simple model. I am getting the following partial simulation output. Kindly advise.

Configuring Dynare ...
[mex] Generalized QZ.
[mex] Sylvester equation solution.
[mex] Kronecker products.
[mex] Sparse kronecker products.

Starting Dynare ...
Starting preprocessing of the model file ...
4 equation(s) found
Processing derivation ...
Processing Order 1... done
Processing Order 2... done
Processing outputs ...
Preprocessing completed.
Starting Matlab computing ...


STEADY-STATE RESULTS:

q -0.0235798
y -0.0754553
r -0.264094
m 0

EIGENVALUES:
Modulus Real Imaginary

0.7993 0.7993 0
0.9 0.9 0
0.9799 0.9799 0


There are 0 eigenvalue(s) larger than 1 in modulus
for 0 forward-looking variable(s)

The rank condition is verified.


MODEL SUMMARY

Number of variables: 4
Number of stochastic shocks: 3
Number of state variables: 3
Number of jumpers: 0
Number of static variables: 1


MATRIX OF COVARIANCE OF EXOGENOUS SHOCKS

Variables p g e
p 0.000000 0.000000 0.000000
g 0.000000 0.000000 0.000000
e 0.000000 0.000000 0.000020

POLICY AND TRANSITION FUNCTIONS
r q y m
??? Reference to non-existent field 'ghs2'.

Error in ==> disp_dr at 60
x = x + dr.ghs2(ivar(i))/2;

Error in ==> stoch_simul at 65
disp_dr(oo_.dr,options_.order,var_list);

Error in ==> blanchard at 123
info = stoch_simul(var_list_);

Error in ==> dynare at 102
evalin('base',fname) ;


Here is the model file:
// Blanchard's Partly Rational Model

var q y r m;
varexo p g e;
parameters a0 a1 c h s a b rho;
a0=0.01;
a1=0.05;
c=3.5;
h=5;
s=0.03;
a=0.8;
b=0.25;
rho=0.9;

// Model Equations - Endogenous Variables

model;
y=y(-1)+s*((a*q)-(b*y)+g);
q=q(-1)+(r*q)-a0-(a1*y);
r=(c*y)-h*(m-p);
m=rho*m(-1)+e;
end;

// Steady state or initial value/s

initval;

q=1;
y=0;
r=0.05;
e=0;
m=0;
end;

steady;

check;

// Define shocks

shocks;
var e = 0.00002;
end;

//Computation

stoch_simul(periods=2100);


Kindly advise.

Regards,

Adeem

Hi Adeem,
Dynare does not support second order approximation for purely backward looking models (the version 4.1 gives you exactly this error message). Put

Code: Select all

stoch_simul(order=1,periods=2100);

instead of

Code: Select all

stoch_simul(periods=2100);

and it works on my machine.

Best regards

Johannes

Thankyou indeed. It worked.

Adeem