Hello everyone,
I have both a sticky economy and a flexible economy in my model in order to get natural output and output gap. When doing dynare command, it stops running and gives warnings as follows:
WARNING: in the ‘steady_state_model’ block, variable ‘c_N’ is not assigned a value.
the variable c_N is consumption under flexible economy while c is consumption under sticky economy.
If all the variables under flexible economy should be assigned values, can I set it be the same as it is in the sticky economy？That is , in the ‘steady_state_model’ block, c_N=c. Can I do this?Would anyone give me a hand? Thank you in advance.
I am not sure I understand. Usually, in steady state all variables in the flex price economy are identical to the sticky price one as price rigidities vanish asymptotically.
Got it , thank you jpfeifer.