Dynare forums

Hi everybody,

I am implementing the non-linear BGG model and I am confused about what's happening to my technology shock...
Here is the idea:

The production function is:

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 y          = ((techno*l)^(1-alpha))*(k^(alpha));

where the variable techno is defined as:

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 (techno/technobar) - ((techno(-1)/technobar)^rhoTechno)*exp(eps_techno);

with technobar=1 and rhoTechno=0.95

in initval, I specified:

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techno      =  technobar;

and in shocks:

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shocks;
    var eps_techno = 0.1^2;
end;


And, it seems that the shock has no impact on the dynamics (variance decomposition = 0 and IRF are not plotted).

I don't see the problem.... The .mod file is enclosed.

Thanks a lot!

Sorry, but your mod-file does not run. Apart from a missing bracket in

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y          = (techno*l)^(1-alpha))*(k^(alpha))

I am not aware that Dynare is able to deal with log-normal cdfs. Hence

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logncdf

is not recognized. Judging from the manual, you may have to rewrite everything in terms of a

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normcdf

See page 12 of the manual.

Hi,
Thanks for the reply. yes, actually, the s.s computation is on another file and I have to use dynare V3.065 if I want to run cdf functions.
Actually, I found the problem, there were a mistake in the specification of the labor disutility function, it works with a CES-type utility function.
Thanks again,
best