I am reading a course of two country model, and I am confuse about the qustion as follows:
Could anyone tell me why the form of formular 35 can be written as ca = b - b(-1); in the dynare code?
I think fomular 35 should be divided into two parts, the foreign part and the home part.
Necessary information are as follows:
The fomular 35 in the book:
The annotation of the book:
The code of the fomular 35;
The variable b means bond.
Here is the code and the book:
chapter_6(orginal).pdf (481.5 KB)
NK_2c.mod (5.8 KB)
Thanks for any advice!
In a two country case, the foreign debt equals home assets. One is the mirror image of the other.
Thanks for your reply, professor jpfeifer!
I have another question of this course.
Could you please offer me some advice of how to get the equation7?
I am confuse that which “first order cindition” can be used to get the equation7.
Thank you very much!
That should be the FOC with respect to investment.