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Foreign price process
Posted:
Thu Sep 01, 2011 5:33 amby gazzani.andrea
Hello everybody, I am trying to specify a open economy model, but I don't know how to specify the process for the foreign price. Do anybody have some suggestions?
Thank you
Andrea
Re: Foreign price process
Posted:
Thu Sep 01, 2011 8:10 amby StephaneAdjemian
Dear Andrea,
If you are building a small open economy model the (relative) foreign price is exogenous and may be modelled as an ARMA process. Such a stochastic process can be easily defined in Dynare.
Best, Stéphane.
Re: Foreign price process
Posted:
Thu Sep 01, 2011 8:20 amby gazzani.andrea
Ok thank you very much
Andrea