Dynare forums

Cheers,
I am studying the work of Aguiar and Drumond (2007), and have the following equation:

rf(t+1)==alpha*E_t[rk(t+1)] + beta*r(t+1)

where E_t denotes rational expectation in t.

How I can write this equation in Dynare?

Please elaborate on the equation and the problems you have. Is this equation in Dynare's timing convention, i.e. r(t+1) is the value of r realized at time t+1 (affected by shocks at time t+1)? In this case, you may want to define

Code: Select all

rf(t)=alpha*E_{t-1}[rk(t)] + beta*r(t)

using an auxiliary variable that stores the expectation of rk(t+1) as of time t (E_t_rk_tp1) and lag it:

Code: Select all

rf=alpha*E_t_rk_tp1(-1) + beta*r;
E_t_rk_tp1=rk(+1);


Thanks a lot dear Johannes.

Cheers

Aldo