Hi all,
After having read a lot of posts about matching data with with the model I have 4 questions that I would like to confirm.
-
If we have our model in log deviation from steady state form and the observed variable is in levels we should detrend the observed variable.
Can somebody confirm this? -
Second, we should also take logs of the observed variable to match it with the model.
Can somebody confirm this as well. -
Also I would like to know which is the preferred way to demean the data- the prefilter option in estimation or HP-filter.
-
How does dynare prefilter the data.
Thanks,
Abhishek.