How to use dynare to express sign and abs function

[xujh03]

Hi, I have a model which uses sign and abs function. But when I put it into the dynare, it seems that dynare cannot recognize it. Does anyone know how to solve this problem?
Thanks

[SébastienVillemot]

Hi

Currently the abs() and sign() function are not available in Dynare models. We may add them in the future if requested.

Note that their use only makes sense in a deterministic context; in a stochastic context, since we are approximating around a point, we are either on one side or on the other side of the abs() function, but we won't cross the zero-point, because we are doing local approximation.

Best

[StephaneAdjemian]

As sébastien says such functions are meaningless with a perturbation approach. However if you want to solve a perfect foresight model (deterministic) you can emulate the sign function as follows:

Code: Select all

signX = (X>=0) - (X<0) ;


where signX and X are declared endogenous variables. Obviously you can also emulate the abs function using the same trick.

Attached is an example with the ramsey model and a sign function on the variations of consumption.

Best,
Stéphane.