I’m new beginner level user of Dynare and I’m new in forum. Maybe my question is so simple, but I need some clearance.

I’ve simple heterogenous agents model with LAMP assumption. And agents’ labour earnings depend on employment status (e). Their employment status is specified by 2x2 transition matrix probabilities.

I’ve questions.
1- Modelling employment status as a transition matrix is possible in Dynare and how?
2- Should I add as shock or should I identify markov swithcing in e parameter?

Thanks a lot. I’ll read Winberry’s documents. In fact, my model is very simple benchmark model now. I’ ll try to expand later and I will use matlab for solving. But now, I can solve analytically except Markov transition matrix. Is it possible that implement 2x2 transition matrix for employment status?

Actually, it is possible to solve and simulate heterogenous agents models with Dynare. This year the guest speaker of the Dynare summer school, Xavier Ragot, gave an introduction on this topic. You can find the summer school material (slides, paper and example) here.