What does the (correction) mean in the output?
POLICY AND TRANSITION FUNCTIONS
c
Constant -0.178268
(correction) 0.000028
k(-1) 0.804421
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What does the (correction) mean in the output?
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What does the (correction) mean in the output?
by gracegu06 » Sun Jul 17, 2011 3:50 pm
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Re: What does the (correction) mean in the output?
by StephaneAdjemian » Mon Jul 18, 2011 12:28 pm
Using the notations of section 4.13.4 in Dynare's manual (about second order approximation)... The constant is equal to y^s+.5*\Delta^2 and the correction is .5*\Delta^2. Put differently, the constant minus the correction is equal to the deterministic steady state.
Best, Stéphane.
Best, Stéphane.
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