by daney » Tue Aug 12, 2008 3:38 pm
I mean, the correct one is the one you told me. Since, capital is predetermined, you can't do
k=(1-DELTA)*k(-1)+DELTA*I
Why?, the correct one, when you have your model log-lin is:
K(+1)=(1-delta)K+DELTA*I
because it shows capital formation by two ways: new investment and reposition that we have to hold the structure of the model. And when we do it in Dynare we must delay the hole eq:
k = (1-delta)k(-1)+delta*i(-1)
and eqs where capital is. On the contrary, I think, the model doesn't run.
Best
Daney