Missing state variable

Dynare help (legacy posts)
1

Hello,

I’m solving a standard RBC model with investment adjustment cost. As a result, lagged investment, i(-1), is supposed to be a state variable. However i(-1) doesn’t appear in the policy function for some reason. Is this a bug or am I missing something?

I’ve attached my mod file.

Thank you!
rbc.mod (956 Bytes)

2

Hi,
shouldn’t there be a first order condition determining the optimal investment? I only see FOCs for consumption, labor and capital.

3

You’re right, I included the wrong equation, sorry.

Thanks a lot for your help!