Hi all,

My humble apologies if this type of question has been dealt with before but I have been unable to find an answer. I have the following equation:

Me = W*n - W(-1)*n(-1);

In other words it is a first-difference equation of the form y= x - x(-1). I would like to limit the equation to yield only positive values (ie: if the result is negative then the equation should take a value of zero). I guess the solution should be in the form of a max function like:

y= max[0; x - x(-1)]

Is it possible to do such a thing in Dynare? And if so would you please direct me to a resource that can help with the syntax.

The closest discussion that I have been able to find appears in the FAQs as:

“If you want to restrict a parameter to positive numbers, use a prior such as “gamma_pdf” or “inv_gamma_pdf”. Note that “estimated_params_bounds” is only used as a help for computing the posterior mode, it isn’t used during MH iterations. It is only for avoiding that the optimizer gets itself lost in regions where the mode can’t reasonably be. It isn’t a device to do constrained estimation.”

Unfortunately I am a Dynare n00b and I have no idea what this means

Any assistance would be greatly appreciated.