Hi All,

I was wondering if it is possible to solve endogenous growth models using Dynare. As I understand, to solve a system in Dynare, the system needs to converge to its new steady state in finite time (to be specified using endval). I am not sure how to handle this for an endogenous growth model. Any suggestion would be welcome.

Thanks.

Yes, it is possible. For deterministic models, the trick is to use only stationary variables in t+1 (If y_t is I(1), you can always write y_{t+1} as y_t+dy_{t+1}, where dy_t= y_t-y_{t-1}).

Of course, you need to know the value of dy_t at the final equilibrium.

If you provide the model, I will show you how to do it.

Kind regards

Michel

[quote=“MichelJuillard”]Yes, it is possible. For deterministic models, the trick is to use only stationary variables in t+1 (If y_t is I(1), you can always write y_{t+1} as y_t+dy_{t+1}, where dy_t= y_t-y_{t-1}).

Of course, you need to know the value of dy_t at the final equilibrium.

If you provide the model, I will show you how to do it.

Kind regards

Michel[/quote]

Thanks Michel. I do not have the model completed yet. I should be done with that in a few days. I will email you the file for your help once I have set up the model. Thanks.

Does anyone have an example on how to do this?

Thanks.