# Computing steady state reassigning a parameter

After working with a stochastic model in Dynare, it works fine so far. But recently I found that in computing the steady state I use a parameter value for calculating some variable’s steady, but after that I re-assign the value of the mentioned parameter. Besides, it computes the steady correctly.

Let me explain with a simple reduced example. This is my steady state file:

``````% Steady state file

k_t = ((1-alpa)*mc_t*a_t*(n_t)^(alpa)/(r_t))^(1/alpa);
I_t = delta*k_t;

I_Y = 0.2; % Invest/Prod. steady state ratio
Y_t = I_t/I_Y;
alpa = 1-k_t*r_t/(mc_t*y_t);

% rest of the file
``````

Note that I use `alpa` for computing steady state of `k_t`, and then “exogenize” steady state of `Y_t` in order to be compatible with the `I_Y` ratio, and consequently I “endogenize” `alpa` and redefine it after haven used it. Previous to all that, `alpa` is fixed in the .mod file with value `0.5`, and then after the process it gets changed consequently to around `0.2`. The steady-state and the stochastic simulation run perfectly.

I thought this was not possible when using steady-state file, but seems like the values get updated automatically, is that a good practice? Also, how does the values get “updated”?

Thanks!

Your steady state file will update the parameters. This is a feature often used for calibration exercises like yours. This is taken care of by the lines:

``````params=NaN(NumberOfParameters,1);
for iter = 1:length(M_.params) %update parameters set in the file
eval([ 'params(' num2str(iter) ') = ' M_.param_names{iter} ';' ])
end
``````
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