I want to obtain and compare the conditional welfare of two models (that differ by policy frameworks).
They have different steady states (and hence initial values for predetermined variables). Thus I want to make a fair comparison by simulating and obtaining the mean of the welfare departing from the same Steady State. I have been checking the manual and other forum entries and it looks like I can do this with histval.
I’ve been trying to find a working example but the one in the manual is missing 1 equation in the model block (page 37).
I have some questions about its implementation:
1. For setting the initial point should I use something like:
histval; Rdc(-1) = 1.0101; Bc(-1) = 0; Ba(-1) = 0; Bb(-1) = 0; Kc(-1) = 41.0521; Ka(-1) = 55.5583; Kb(-1) = 55.5583; end;
where the declared variables are the state variables of the model (that Dynare usually sets as the SS of the model).
histval; Rdc(0) = 1.0101; Bc(0) = 0; Ba(0) = 0; Bb(0) = 0; Kc(0) = 41.0521; Ka(0) = 55.5583; Kb(0) = 55.5583; end;
(My Decision Rule only has states with 1 lag. My hunch is that it should be X(0) then and that X(-1) is used when I need higher order lags to begin with, e.g., if I have some X(-2) in my decision rule)
2. In the histval block: Should I declare the steady state I want to depart from, or instead, deviations from such steady state ? (i.e., my intended departing point minus the actual steady state of the model in the file).
3. If I set in the model:
#Utilc = Cc^(1-siggma)/(1-siggma) - Hc^(1+pssi)/(1+pssi) Wc = Utilc + betta*Wc(+1)
And at the end I set:
Would this output correspond to the conditional (on the same SS) welfare I am looking for comparing models?
MOMENTS OF SIMULATED VARIABLES VARIABLE MEAN STD. DEV. VARIANCE SKEWNESS KURTOSIS Wc -53.537709 0.896102 0.802998 -0.028222 -0.804784
4. Is there any example file/link where the conditional welfare of two models is compared, hopefully using histval to achieve this?
In the case I am missing something and misinterpreting the manual and other entries in the forum, I’d also appreciate if someone indicates whether is wrong to do the Conditional Welf comparison with histval.