Dynare forums

Dear all,

I have probably a very basic question, but I got stuck a bit about it. Could you please explain me how we set the discount factor beta so as to match the long-term interest rate? So, for example, if I want to match the annual long term interest rate of 2.25% how should I calculate beta? (R = 1/beta in ss)

Thanks in advance!

If your model is annual,

Code: Select all

beta=1/R=1/(1+0.0025)