Dynare forums

Dear all

I am now working on a dynare program. However, the simulation result shows that the variance of output and other variables are far more than the real economy.

Does anybody know what the problem might be ?

Thanks a lot!

In the real economy, the variance of output, investment and consumption is 0.013, 0.034 and 0.017 respectively.

My guess is because
1. You are not treating the data and the model variables the same way. When extracting the moments from the data, you surely used an HP-filter. But you did not filter your model variables. That's why you cannot comapre them.
2. Your calibration is weird. beta is really high and for some reason investment is much too volatile.

jpfeifer wrote:My guess is because
1. You are not treating the data and the model variables the same way. When extracting the moments from the data, you surely used an HP-filter. But you did not filter your model variables. That's why you cannot comapre them.
2. Your calibration is weird. beta is really high and for some reason investment is much too volatile.

Thank you so much. I guess you are right. Indeed, I did not treat the model variables with HP-filter. So how should I solve this problem, by transforming the variable?
The calibration is based on some papers that study China`s business cycle problem which might seem a little different from other papers.

Use the option

Code: Select all

hp_filter=1600