Dealing with C_t as control while C_t-1 is state

I have worked on this exercise but the program keeps crashing because I don’t know how to enter C_t as control while C_t-1 is state. I have 7 FOC loglinearized and the 2 shock conditions, but I still have 10 variables to solve for.

Can someone help please. Thanks,

Which software are you working in? And where exactly is the problem? In Dynare, there is only one variable C at different points in time. In the SGU toolkit, you would need to define an auxiliary variable.

Hi professor,
sorry for the late reply. I was trying to resolve the issue but I’m still facing problems with this. Please see attached the code I’m using and the error message I get every time I run this. Any help with this is highly appreciated. Thanks.

Attempt.mod (1.4 KB)

Screen Shot 2020-05-06 at 8.03.59 AM

Hi professor,
I worked on this a little more and found that I didn’t give an initial value to v. But I still get an error when I run it. Here is the updated code with v included along with the error message. Thanks. I hope you can help me figure out where the issue is. Thanks.

Attempt.mod (1.4 KB)

Screen Shot 2020-05-06 at 10.55.13 AM

There are a bunch of errors. Your TFP in the equations should be exp(A) as otherwise output in steady state is 0 as A has steady state 0. Also K must be defined as a predetermined_variable.

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Hi professor,

It’s good now. All works. Thank you so much.

Thank you for all the help. I appreciate it a lot.


Hello professor,
I’m still working with the same model and trying to find:
1- the law of motion of the state variables
2- the decision rules for controls.

I found that we can get the decision rules for controls by using this line of code. stoch_simul(order=1, nocorr, nomoments, IRF=0) C K N I V;

But then it crashes. It only works when I take out V. Is there a reason why? isn’t V part of the controls?

Also, I don’t know how to find the law of motion of state variables. Can you please help? Can Dynare solve for that?


Please provide the newest version of the mod-file

Sure. here it is. Thank you.

Attempt.mod (1.4 KB)

Dynare is case-sensitive. V is not defined, only v.

It worked. thank you so much.