I am new to Dynare and looking for some help regarding the following questions:
As we know that the solution of DSGE is a state/transition equation and a policy/observation equation. However, when all variables defined under -var- block are included in the state variable vector (as per dynare manual), then what are the policy variables ?
Dynare output under “Policy and Transition Function” exhibits a table of endogenous variables as a function of its own and other variables lags , does this suggests that policy variables are the state variables but at time t (today) ?
Thank you very much,