A general question:
can dynare deal with models, which have no steady state?
Many greetings,
Daniel
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No Steady State
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Re: No Steady State
by jpfeifer » Tue Oct 08, 2013 8:13 am
What do you mean with no steady state? For stochastic simulations, Dynare linearizes around the non-stochastic steady state (which may be non-unique). If it does not exist, it won't work.
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Re: No Steady State
by Daniel Bendel » Tue Oct 08, 2013 8:39 am
I mean, I have a model with a government and a central bank. The government optimizes a utility function but with a different discont rate then the household, thus I get a equilibrium condition that in the steady state demands that both discont rates have to be the same, which they can't due to the assumption of a myopic government. Thus I wondered that the system has no steady state. Perhaps I am wrong, since I also think, that it could be that this system has no steady state since the government accumulates to much debt due to myopia.
Do you understand what I mean? I hope...
Do you understand what I mean? I hope...
Germany, Cologne
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