Hi there, I have a puzzling question that annoys me much and I wonder if you could help. In my dynare code, if I write the mod file in LEVEL, with a relatively large shock, some of my variables simulated are negative. This negative value is not wished. So I want to avoid this. One way is to decrea…

As my reply said: it is about the linear model solution. Whether you use the level or the log-level in the nonlinear model, you will be approximating it with a linear function at first order. Linear functions, by construction, are unbounded. That is an approximation error you will have to live with. …

Log and level in dynare

Stochastic simulations

jpfeifer January 9, 2020, 4:39pm 2

In a nutshell