Expectations and fractions of variables inside of expectations


#1

Hello,

I am currently working with a complicated model with a lot of nonlinear equations and I was wondering how can one write expectations and fractions of variables inside expectations in Dynare. For example, if I have a term like E_t {(k(t+1) / (1 - k(t+1))) + beta * E_(t+1) {k(t+2)}}.

Do I need to define auxiliary variables to tackle this or can I just use (+1) and (+2) notations?

Thanks.


#2

In principle, you would need to use auxiliary variables. But you can let Dynare do this for you via the

EXPECTATION (INTEGER) (MODEL_EXPRESSION)

operator. See Section “4.3.2 Operators” of the manual.