Approximate around user provided values

[Alex_Co]

Dear all,

I am wondering whether Dynare can solve around user provided values. It seems that the exact solution for my steady state is far from the Dynare non-linear solver ones.

Would defining a steady_state_model block work for that? I mean is that block just providing guess values for the non linear solver or are the solutions of that block used as initial values?

Thanks for your help.

Alex

[jpfeifer]

I am not completely following. What do you mean with "the exact solution for my steady state is far from the Dynare non-linear solver ones."

For the difference between initval-blocks and steady_state_model-blocks, see "Remark 15 (initval vs. steady_state_model vs. steadystate-file)" in "A Guide to Specifying Observation Equations for the Estimation of DSGE Models" at https://sites.google.com/site/pfeiferec ... ations.pdf

[Alex_Co]

Hi,

Thanks for your answer. Sorry I was not very clear in my previous post. My question is the following: "suppose I know the exact stochastic steady state of my model. Is it possible to have Dynare loglinearize around these values instead of the deterministic steady state ones?

Thanks again

Alex

[jpfeifer]

That should be possible, but requires some hacking on your part. In particular, you must set the nocheck option to prevent Dynare from checking whether the values you provided in the steady_state_model are actually a steady state. Dynare will then take those values as the "steady state" it is approximating around. The problem is that this is not really tested and the implications of what you get out are unclear. So I would not recommend this.

[Alex_Co]

Thanks!