I’m just starting with DSGE models. I’m not sure if it is right category for my problem, so you can move the topic.
I have a question about my model. I merged two DSGE models and I’m not sure if my equations are correct. Could I ask you for your opinions or any advice about it.
My model - combination of models 1 and 2:
Thank you in advance.
You are merging equilibrium conditions from two model, right? Like a short-cut to rewriting the optimization problem of the third model and solving it?
Well, I think that would be best, thus, rewrite the optimization problem of the third model for each agent and then derive the equilibrium equations, instead of trying to merge equilibrium equations from two models as this will be hard if the models are large. Not sure there is a standard way to merge equilibrium equations of two models.
@kofiemma is right. Simply merging equations is generally not correct as different setups will result in different first order conditions.