Dear all,
I have the following question: the “osr” command computes,amongst other things,the value of the objective function (which is typically a weighted average of some endogenous variables’ variances). In the literature it is often preferred to express the welfare loss as “fraction of steady state consumption”.
How is the objective function value calculated by “osr” related to the notion of “fraction of steady state consumption”?
Thanks a lot in advance for all your feedbacks.
Kind regards,
Georgre