Initial values in Dynare
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Posted:
Tue Apr 07, 2015 2:39 pm
by leili29
I might have a silly question, but i'm a new dynare user. How can I find the initial values in dynare if i have an actual data?
Thank you in advance
Re: Initial values in Dynare
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Posted:
Tue Apr 07, 2015 6:44 pm
by jpfeifer
Actual data is typically irrelevant for the initial values. What matters are the great ratios, not the actual levels. Use economic intuition to provide plausible starting values. For example output is bigger than consumption which is bigger than investment. Capital is often investment divided by the depreciation rate. None of those variables can be zero or negative (Important: always provided positive starting values for variables that can only take positive non-zero values).