I am currently thinking about combining the extended path method (extended_path) with exogenous deterministic variables (varexo_det). It seems to me that this combination should be feasible from a theoretical point of view. However, either I am mistaken, or Dynare doesn’t work for this combination.
If I run a small example (the one from here: [Problem with varexo_det/ forecast + 2nd order approximati), file attached below) with the same variables, model, etc., but apply extended_path instead of stoch_simul, Dynare or Matlab quits with an error. While calling the dynamic file in the perfect foresight part of each extended path iteration, Dynare tries to access the values for deterministic exogenous variable (x(it, 3) in the quote below, or e_det in the example), but it seems that the corresponding matrix (x) does - my guess - not include these series, but only those for the ‘regular’ stochastic variables (e and u in the example). Formally, Dynare or Matlab returns:
I’m very grateful for any help or thoughts in either direction - whether I am mistaken theoretically or Dynare doesn’t like this combination (yet). And apologies if I should have missed a similar post.
PS: This quote is based on unstable 4.4.4 (most current version of ZIP file), but the problem also appeared in stable 4.4.3.
example2_A.mod (1.84 KB)