Dynare forums

by **stsp** » Sun Sep 20, 2015 9:03 am

Hello there, I was wondering if:

1. Dynare can solve a system with an unstable steady state. And if Dynare can do this, how? Or more precisely, how do I prevent the error that there is no stable steady state? (but provide the analytical solution of the unstable steady steady);

2. Would the results be valid?? I tried to find some references on this, but I can't find any.

Many thanks in advance!

by **jpfeifer** » Mon Sep 21, 2015 7:08 am

What do you mean with "unstable steady state". That is an oxymoron. The steady state is a resting point of the system. It can be non-unique or the dynamics of the system around the steady state can be explosive/unstable.

by **stsp** » Wed Oct 07, 2015 1:23 pm

With an unstable stable I meant a system that can implode/explode when it deviates from the s.s. (at least in expectations: I will use Bounded Rationality).

Can dynare give me the approximate solution of the system around the s.s.?

by **jpfeifer** » Sat Oct 10, 2015 7:45 am

No, at the current stage Dynare only allows computing unique bounded solutions. That is, the Blanchard-Kahn conditions need to be satisfied

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