Debt-to-GDP ratio - predetermined variable

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Debt-to-GDP ratio - predetermined variable

Postby ifa » Tue Aug 02, 2016 2:02 pm

I'd appreciate if someone could help me with a simple doubt. Government debt, B(t) is a predetermined variable. Accordingly, I have to write this variable with a one period lag in the file.mod, as B(t-1).

Nevertheless, if b(t) is the debt-to-GDP ratio, defined as b(t)= B(t)/Y(t-1), should I write b(t-1) in the dynare code or b(t)?

Thank you
ifa
 
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Re: Debt-to-GDP ratio - predetermined variable

Postby jpfeifer » Tue Aug 02, 2016 2:05 pm

If it's the share relative to past GDP as you write, then it is still predetermined, because past output cannot be changed anymore at time t. In this case it should be b(-1).
------------
Johannes Pfeifer
University of Cologne
https://sites.google.com/site/pfeiferecon/
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Re: Debt-to-GDP ratio - predetermined variable

Postby ifa » Tue Aug 02, 2016 2:08 pm

jpfeifer wrote:If it's the share relative to past GDP as you write, then it is still predetermined, because past output cannot be changed anymore at time t. In this case it should be b(-1).


Thank you very much jpfeifer for your quick response! :)
ifa
 
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