Dynare forums

Hello,

One of my characteristic equations looks like this:

k=Et(Rt+1)/Vart(Rt+1)

Expected value of R is calculated by Dynare, but what is the case with variance? How Can I make Dynare to calculate variance from the above equation?

Please help

By using at least a second order approximation and entering the formula for the variance explicitly. You also need to make use of an auxiliary variable, see
http://www.dynare.org/phpBB3/viewtopic.php?f=1&t=3417
However, you will get a problem with this equation in steady state.