Markov shocks


I’m just wondering, whether the new version of Dynare 4.3.0 can simulate a model with Markov shocks?

Many thanks!

Could you elaborate what you mean?

I’m trying to simulate a New Keynesian model (log-linearized) with one of the parameters, alpha, following a two-state Markov progress. In each period, alpha has a constant probability x taking the value of 1, and the complementary probablility (1-x) taking the value of 0.8. Can I model this with Dynare? Do I need to write an external file in Matlab to do this?

Thanks again!