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!
Dynare forums
Forums for asking questions, posting comments and uploading examples related to Dynare
Discount factor and interest rate
Forum rules
This forum is closed. You can read the posts but cannot write. We have migrated the forum to a new location (https://forum.dynare.org) where you will have to reset your password.
This forum is closed. You can read the posts but cannot write. We have migrated the forum to a new location (https://forum.dynare.org) where you will have to reset your password.
2 posts
• Page 1 of 1
Discount factor and interest rate
by theta23 » Sun Jun 07, 2015 11:50 am
- theta23
- Posts: 20
- Joined: Mon Apr 27, 2015 3:20 pm
Re: Discount factor and interest rate
by jpfeifer » Sun Jun 07, 2015 12:19 pm
If your model is annual,
- Code: Select all
beta=1/R=1/(1+0.0025)
- jpfeifer
- Posts: 6940
- Joined: Sun Feb 21, 2010 4:02 pm
- Location: Cologne, Germany
2 posts
• Page 1 of 1
Who is online
Users browsing this forum: Google [Bot] and 9 guests