Dynare forums

Dear Dynare users,

First, let me thank to the developers of Dynare, for a fantastic tool for us economists!

I have a problem. I read the manuals and browsed the forum, but found no solution. Since others might have come across a similar problem, I decided to ask you for an advice.

I would like to simulate a model with a stoch_simul() function. In the model, I have a parameter that changes value. An example might clarify the idea: Suppose you have a small model with a consumer, in which consumers discount factor, beta, changes from 0.97 to 0.99. I would like to simulate consumption time series. I tried to bypass the problem using command "varobs beta" to declare the time changing beta as an observed variable instead as a parameter. I did not work.

Has anybody had a similar problem or can think of a neat solution?

Thank you for your kind help!

Dear Dynare users,

No help needed, I just had to think a bit harder. I circumvented the problem simply by declaring deterministic exogenous variable and setting it to the desired level for the desired periods:

varexo_det deltabeta;
...

One Q. though, with "varexo" command we usually declare the shocks with zero expected value. Is the deterministic "varexo_det" expected by the decision makers or is it an unexpected shift?

Kind regards,
Vasja