Hi,

I’m trying to compute the unconditional welfare. However, it turned out that the stochastic mean of unconditional welfare is larger than its deterministic steady state. Then I found something more strange.

In the mod file fabur.mod (753 Bytes)

, an exogenous shock `VarPhi`

follows the rule

`log(VarPhi) = (1-0.9)*log(1) + 0.9*log(VarPhi(-1)) + Eps_phi;`

Here are four strange things…

- The steady state of VarPhi is 1, while in oo_.mean the value is 1.026.
- After I changed
`+ Eps_phi`

into`- Eps_phi`

, the result was the same. - After I changed the rule into
`VarPhi = (1-0.9)*log(1) + 0.9*VarPhi(-1) - Eps_phi`

where the steady state is zero now, oo_.mean is still larger than zero. - After I raised the variance of Eps_phi, oo_.mean got even larger.

Anyone can explain the above facts? Or how can I fix it?

Thanks!!!

fabur.mod (753 Bytes)