Hello,
I'm solving a standard RBC model with investment adjustment cost. As a result, lagged investment, i(-1), is supposed to be a state variable. However i(-1) doesn't appear in the policy function for some reason. Is this a bug or am I missing something?
I've attached my mod file.
Thank you!
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Missing state variable
by giangho » Tue Jun 29, 2010 11:16 pm
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Re: Missing state variable
by jpfeifer » Wed Jun 30, 2010 7:11 am
Hi,
shouldn't there be a first order condition determining the optimal investment? I only see FOCs for consumption, labor and capital.
shouldn't there be a first order condition determining the optimal investment? I only see FOCs for consumption, labor and capital.
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Re: Missing state variable
by giangho » Wed Jun 30, 2010 8:09 am
You're right, I included the wrong equation, sorry.
Thanks a lot for your help!
Thanks a lot for your help!
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