Asset bubbles

Dynare contributions and examples
1

Can anybody help in asset bubbles modeling in DSGE, e.g., replicating the artiacle of Bernanke & Gertler (BG) Monetary Policy and Asset Pricing?

  1. How to get their Chart 1? I hve BGG Financial accelerator model but cannot introduce the asset bubble, specifically:
  2. What about eqution A5: should I multiply it by p=0.5.
  3. How to trigger the bubble in Dynare,what about bursting it, how it can be done?

Thank anybody for any help,
Regards,
Roman.

2

The fast question:

there is the following equation:

s(+1)-q(+1)=2.0*(s-q)+e

I want everything (s(+1),q(+1),s,q,e) to be zeros until some time, say, period 3. In period 4 e becomes 0.01 in peiod 4 and again 0s in all other periods and the difference s(+1)-q(+1) starts increasing. Then in period 8 again everything becomes zeros.

This equations describes the boom-bust asset bubble.
How to mode this process in Dynare?

Regards,
Roman.