Dear Johannes,

Could I ask you a question about ARMA(1,1) in dyanre?

I take log of oil price/GDP deflator data, and then use Hp-filter to obtain the cyclical part. Then I find this part data follow ARMA(1,1). Then is it right to write the oil price(which is **log linearized** in the model) in dynare as below:

P=a*P(-1)+b*eP+c*eP(-1); and estimate a, b, c ,and the std of eP shock? If this is right, then I do not need estimate the constant term in the ARMA(1,1)?

Many thanks in advance!

Huan