Exogenous variables in DSGE

Good morning everyone,

I was wondering if Dynare, in a perfect foresight setup, treats the exogenous variables as “constants” if one does not apply shocks to these variables, since they do not react to the model equations.

I often see papers, in a deterministic environment, which assign temporality (the “t”) to exogenous variables in their equations, while these variables are really “constants” and should not be indexed by “t”. That’s just a “drafting issue” I’m asking there.



Yes, they are constants in this case. But if they can generally change, e.g. because later on you consider different experiments with different values, people sometimes use a time index. I agree that this can be confusing if you denote something as a variable that is actually a parameter.

Thanks :slight_smile: