# Can I run a rational inattention DSGE model with Dynare?

**URL:** <https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960>\
**Category:** Macroeconomic Model Data Base\
**Created:** [14 March 2022 01:14 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960 "2022-03-14T01:14:57Z")\
**Posts on this page:** 8\
**Page:** 1

<div class="post-metadata">

**Author:** ![Nancy1](https://forum.dynare.org/letter_avatar_proxy/v4/letter/n/b19c9b/32.png) [@Nancy1](https://forum.dynare.org/u/Nancy1)\
**Post date:** [14 March 2022 01:14 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960/1 "2022-03-14T01:14:57Z")

</div>

Hi, I am new to dynare and wonder if I can run a rational inattention model with Dynare.  
DSGE model basically assumes full-information rational-expectations but I want to introduce rational inattention with information constraint into my DSGE model. Can I model this with Dynare?

---

<div class="post-metadata">

**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [14 March 2022 12:55 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960/2 "2022-03-14T12:55:17Z")

</div>

Which particular model did you have in mind? I guess the general answer would be no and you may have to rely on e.g. [EconPapers: Linear rational-expectations models with lagged expectations: A synthetic method](https://econpapers.repec.org/article/eeedyncon/v_3a34_3ay_3a2010_3ai_3a5_3ap_3a984-1002.htm)

---

<div class="post-metadata">

**Author:** ![J.Guo](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/f07891/32.png) [@J.Guo](https://forum.dynare.org/u/J.Guo)\
**Post date:** [30 March 2022 16:00 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960/3 "2022-03-30T16:00:20Z")

</div>

Thanks for the reply! So when Dynare solves a DSGE model involving Et-1 (using Expection (-1) command), it follows the approach in this paper?

---

<div class="post-metadata">

**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [31 March 2022 06:59 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960/4 "2022-03-31T06:59:16Z")

</div>

No, the paper linked is about rational inattention. the E\_{t-1} refers to normal rational expectations modeling.

---

<div class="post-metadata">

**Author:** ![J.Guo](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/f07891/32.png) [@J.Guo](https://forum.dynare.org/u/J.Guo)\
**Post date:** [31 March 2022 07:05 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960/5 "2022-03-31T07:05:17Z")

</div>

Thanks for the reply. Then how does dynare model rational expectation model with both Et and Et-1 in it?

---

<div class="post-metadata">

**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [31 March 2022 08:20 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960/6 "2022-03-31T08:20:54Z")

</div>

You can do that by defining auxiliary variables and equations. You can define  
x\_{aux1,t}=E\_t(x\_{t+1})  
Its lag will then be equal be E\_{t-1}(x\_t)

---

<div class="post-metadata">

**Author:** ![J.Guo](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/f07891/32.png) [@J.Guo](https://forum.dynare.org/u/J.Guo)\
**Post date:** [31 March 2022 12:28 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960/7 "2022-03-31T12:28:40Z")

</div>

Thanks! Could I ask one more question? I want to solve a DSGE model with Et and Et-1 in MATLAB. So I would like to know which approach Dynare is using.

---

<div class="post-metadata">

**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [31 March 2022 13:29 UTC](https://forum.dynare.org/t/can-i-run-a-rational-inattention-dsge-model-with-dynare/19960/8 "2022-03-31T13:29:31Z")

</div>

Dynare will simply introduce auxiliary variables as shown above.