Can Dynare solve this type of model

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Can Dynare solve this type of model

Postby MortenBM » Tue Oct 30, 2012 4:19 pm

Hi.
I am currently writing my bachelor assignment in economics and is doing a model with forward looking rational expectations of the inflation and output gab in an economy participating in a monetary union. Because solving the model mathematical and manually is not the focus of my assignment I want to use a program to solve it. I think I can use Dynare to do it, but I cannot get it to work.
My core model has the following equations:
I_t=r*+π* the interest rate sat by the union central bank. r* is average real return rate and phi* is the average inflation target.
y _it=E_t (y_it+1)-α(I_t-E_t (π_i,t+1) -r_it)+v_it The output gab, and r_it is the real return rate for country i at time t. E_t is the expected value of the variable.
π_it=β*E_t (π _i,t+1))+κy_it+s_it
π_i-π*=r'-r_i The steady state inflation
In steady state the output gab is 0.
Can dynare solve this model? I have tried a bit, but cannot get it to do so, and I am also not sure if it can be done. Hope you can help.
MortenBM
 
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