Hi all,

I want to investigate the shape of the transition from an arbitrary initial point, different from the steady state, but I still get a jump in the variables as if there was a shock going on. I don’t want to shock the system, I just want to see the smooth transition to the ss without any jumps.

For that purpose, I remove the “steady” command after the “initval” block but still get unwanted jumps in the simulation. I quote from the User Guide: “…if you wanted to begin your soulution path from an arbitrary point, you would enter those values in your initival block, followed by the command steady…”

I paste the short code below:

var k Q c m;

varexo pop;

parameters alpha mu beta;

alpha=0.3;

// eta=0.04;

mu=0.8;

beta=0.9;

model;

(pop/c)=beta*((pop/c(+1))*(1+alpha*k^(alpha-1))-pop*mu*alpha*k^(alpha-1)/c(+1));
(1/c)=beta*((1/Q)+(1/c(+1)));

k=k(-1)^(alpha)+k(-1)-c-m;

Q=Q(-1)+pop*(m-mu*k(-1)^(alpha));

end;

initval;

pop=1; // 2 IS THE VALUE FOR POPULATION FOR WHICH Q_RSS IS BELOW THE THRESHOLD AND IT’S STABLE, GIVEN THE PARAMETER VALUES WE ASSIGNED. WE CAN MAKE A NICE GRAPH OUT OF THIS.

k=0.5;

Q=1.4;

c=((1-mu)^(1/(1-alpha)))*((beta/(1-beta))*alpha)^(alpha/(1-alpha));

m=k^(alpha)-c;

end;

// Check that this is indeed the steady state

/* steady;

// Check the Blanchard-Kahn conditions

/* check;

endval;

pop=1;

k=((beta/(1-beta))*(alpha*(1-mu)))^(1/(1-alpha));

c=((1-mu)^(1/(1-alpha)))*((beta/(1-beta)) alpha)^(alpha/(1-alpha));*((beta/(1-beta))*alpha)^(alpha/(1-alpha));

Q=(beta/(1-beta))((1-mu)^(1/(1-alpha)))

m=k^(alpha)-c;

end;

steady;

check;

simul(periods=100);

rplot c;

rplot k;

rplot Q;

rplot m;

Any help would be much appreciated!!

Thank you