Hello, I’m a graduate student working with DSGE models and dynare for the first time, and I’m having a bit of trouble entering my model,
the First is :
Bank retained earnings ln(IB_hat) depends on its past and expected future values, and is driven by the relative shadow price of bank capital, according to:
%(29) Bank retained earnings ln(IB_hat)
ln(IB_hat) = 1/(1+beta)*ln(IB_hat(-1)) + beta/(1+beta)*ln(IB_hat(+1)) + 1/(chiB*(1+beta))*ln(QB_hat/PY_hat);
When entering the model in steady_state_model, it seems that after removing time subscripts, the left-hand term and the two right-hand terms would cancel out 。
ln(IB_hat) - (1/(1+beta)*ln(IB_hat) + beta/(1+beta)*ln(IB_hat) ) = 1/(chiB*(1+beta))*ln(QB_hat/PY_hat);
because there are other terms on the right side of the equation. How should such a model be entered in Dynare? Is there a misunderstanding in my comprehension ?
the second is:
in steady_state_model,
the ln(IB_hat) depends on the ln(QB_hat/PY_hat), but the ln(QB_hat/PY_hat) depends on the k_hat → KB_hat → IB_hat, how could I deal with …
%(29) Bank retained earnings ln(IB_hat)
ln(IB_hat) = 1/(1+beta)*ln(IB_hat(-1)) + beta/(1+beta)*ln(IB_hat(+1)) + 1/(chiB*(1+beta))*ln(QB_hat/PY_hat);
%The bank capital stock ln(KB_hat(+1))
ln(KB_hat(+1)) = (1-deltaB)*(ln(KB_hat)-deltaB_hat) + deltaB * ln(IB_hat); %The bank capital stock ln(KB_hat(+1))
%The bank capital ratio k_hat(+1) satisfies
k_hat(+1) = kR *(ln(KB_hat(+1))-ln(AB_hat(+1)));
%the relative shadow price of bank capital
ln(QB_hat/PY_hat) = beta* (ln(QB_hat(+1)/PY_hat(+1))) - iB_hat -(1 - beta)*etaB/kR*(k_hat(+1)-k_hatR(+1));
steady_state_model
IB_hat = ...；
KB_hat = exp((- (1-deltaB)*deltaB_hat + deltaB * ln(IB_hat))/deltaB);
k_hat = kR *(ln(KB_hat)-ln(AB_hat));
QB_hat= PY_hat * exp((- iB_hat -(1 - beta)*etaB/kR*(k_hat-k_hatR))/(1-beta));
end；
Thank you for your help.