# Measurement equation

**URL:** <https://forum.dynare.org/t/measurement-equation/3725>\
**Category:** Dynare help (legacy posts)\
**Created:** [25 February 2014 09:40 UTC](https://forum.dynare.org/t/measurement-equation/3725 "2014-02-25T09:40:30Z")\
**Posts on this page:** 2\
**Page:** 1

<div class="post-metadata">

**Author:** ![tophukg](https://forum.dynare.org/letter_avatar_proxy/v4/letter/t/ba8739/32.png) [@tophukg](https://forum.dynare.org/u/tophukg)\
**Post date:** [25 February 2014 09:40 UTC](https://forum.dynare.org/t/measurement-equation/3725/1 "2014-02-25T09:40:30Z")

</div>

Hello everybody,  
I’m a student and i’m a new dynare user. In paper “Estimating a small open economy DSGE model with indeterminacy: Evidence from China”. As data description, they have:  
Output gap : Gap\_t = 100_ln(Y\_t/Ys\_t); Y\_t : real GDP, Ys\_t : potential output.  
Inflation rate: Inf\_t = 400_ln(P\_t/P\_t(-1)); P\_t : CPI  
Nominal Interest Rate : R = CHIBOR (China inter-bank offered rate).  
Then they have measurement equations :  
Gap\_t = y\_t  
Inf\_t = 4_pi\_t  
R = 4_R\_t  
But, in Lubika and Schorfheide (2007): The measurement equations:  
output growth : deltaY\_t = gammaQ + y\_t - y\_t(-1) + z\_t  
Inflation rate : Inf\_t = piA + pi\_t  
Interest rate : Rob\_t = piA + rA+ 4\*gammaQ + R\_t  
Both of them have the same data description ( except output gap ). But , they have difference measurement equations.  
Any ideas about why? Which measurement equations should i choose ? I have the same data with China case. My english is not good, sorry for any mistake  
Thank you in advance for your help.

---

<div class="post-metadata">

**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [2 March 2014 11:29 UTC](https://forum.dynare.org/t/measurement-equation/3725/2 "2014-03-02T11:29:49Z")

</div>

Please see Pfeifer(2013): “A Guide to Specifying Observation Equations for the Estimation of DSGE Models” [sites.google.com/site/pfeiferecon/Pfeifer\_2013\_Observation\_Equations.pdf](https://sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf).  
The main difference in your description seems to be whether the model is written down in stationary form and whether the data was demeaned.