# Investment going down and Capital stock going up

Good evening,

When I do PF simulations, I find a rather odd result for one of my scenarios: the investment is going down while capital stock is going up for several years. Is it because of cost of adjustments ?

Thank you

Without knowing the model it’s hard to tell. Adjustment costs may be one reason, but it still sounds odd. In that case, higher investment would cause adjustment costs bigger than the increase in investment…

I think my problem is with the capital stock of my Ricardian household.

I have in my model that K(t) = share of Ricardian * K_ricardian(t)

What’s odd is that the result of simulation does not verify this equation. While the results verify Inv_k(t)= share of Ricardian * Inv_k_ricardian(t). That’s odd.

Is there some trick when considering two types of household regarding the capital stock process ? Should I specify K(t+1)=share of Ricardian *K_ricardian (t+1) instead of date t ?

thank you @jpfeifer

I would need to see more of the model. In your equation

``````K(t) = share of Ricardian * K_ricardian(t)
``````

is any of the variables predetermined?

Yes they are predetermined. Can I send you the m. File via email? I can’t post it here since my work belongs to the firm Im working for

Thank you. Very much appreciated @jpfeifer

That explains the problem. If `K_ricardian` is predetermined, then `K` is typically not. The reason is that the above equation is a definition. The value of capital today is whatever Ricardian agents chose it to be yesterday.

Thank you @jpfeifer

What should I do ? K is already defined in my file as non predetermined and K_r as predetermined.