Hi Prof. Pfeifer, I know your non-stationary solow mod file that studies transition dynamics from 90% below BGP to BGP. May I kindly ask if dynare can simulate, not to BGP, but from BGP like in this graph. [Screenshot from 2022-03-10 20-16-13] They initially have the model in extensive form (x_…

Yes, e.g. var k invest; parameters delta g; g=0.02; delta=0.05; model; k=(1-delta)*k(-1)+invest; invest=(1+g)*invest(-1); end; initval; invest=1; k=1; end; perfect_foresight_setup(periods=100); perfect_foresight_solver; rplot k invest;

See [image] Random walk with a drift process Stochastic simulations Detrending is just a convenient normalization for the solution technique. You can later add the trend back. See e.g. https://github.com/JohannesPfeifer/DSGE_mod/blob/master/Aguiar_Gopinath_2007/Aguiar_Gopi…

Many thanks!!! So like if the intensive form is, say, y_t = \frac{Y_t}{A_{t-1}}, then we have, log_Gamma(ii,1)=g(ii,1)+log_Gamma(ii-1,1); \approx logA_t = log(g_t + 1) + log A_{t-1} And log_y_nonstationary(ii,1)=log_y(ii,1)+log_Gamma(ii-1,1); \approx log\; Y_t = log\; y_t + logA_{t-1} And we …

Yes, that looks OK, except for the HP filter trend not implying a constant growth rate.

Dear Dynare team, Can Dynare simulate forward a purely backward-looking, but unbalanced growth model, starting from some initial values and letting it run forward until some final time T? Kind regards, Anton

Can DYNARE simulate from BGP

Perfect foresight simulations

jpfeifer 10 March 2022 14:33 2

See

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