Dear Johannes,

I have a question about the assignment of values to exogenous variables when we use a *_steadystate.m file.

In a deterministic setting, where a shock consists in a permanent change in the value of exogenous variables (for instance a change in the exogenously-defined value of government spending g), where should we assign the initial value of g and the final value of g?

In my past research articles, I was able to compute the steady state by hand. In this case it is easy to perform a permnanent change to exogenous variables, just by doing (for instance):

initival;

c = … // Endogenous variable but initial steady state value obtained by hand

y = … // Endogenous variable but initial steady state value obtained by hand

l = // Endogenous variable but initial steady state value obtained by hand

g = 0.5 // Exogenous variable

end;

endval;

c = … // Endogenous variable but initial steady state value obtained by hand

y = … // Endogenous variable but initial steady state value obtained by hand

l = // Endogenous variable but initial steady state value obtained by hand

g = 0.7; // Exogenous variable permanently changed

end;

But in my current research I cannot get the steady state by hand and have to compute it using an external .m file. How should I code my permanent shock to exogenous gov spending? Would I just keep the exogenous variables in initval and endval, remove the endogenous variables, and write steady? Doing for instance:

initival;

g = 0.5;

end;

steady; // Writing steady importing our value from our .m file, TAKING INTO ACCOUNT the value of g we have just written?

initival;

g = 0.7;

end;

steady; // Writing steady importing our value from our .m file, TAKING INTO ACCOUNT the value of g we have just written?

I think that usually, we remove the initval and endval sections when we use external steady state m. files, but then how to a model a shock to exogenous variable?

Thnak you very much for your help,

Hugo