Dear Professor,
In the paper that I wanted to replicate,
DPt denotes household foreign-currency debt; the representative
household’s end-of-period budget constraint is thus given at the attachment.
However, I saw that it was written as in modfile;
DP=(1+RW(-1))*DP(-1)-YT(-1)-Z(-1)^(-1)*YN(-1)+(1+tau)*C(-1)+IP(-1)+TL(-1)
Why can all variables be written with one period back? what can be logic behind it?. Shouldn’t we write as below since DPt is predetermined variable (since it is debt stock)
DP=(1+RW)*DP(-1)-YT-Z^(-1)*YN+(1+tau)*C+IP+TL
or
DP(+1)=(1+RW)*DP-YT-Z^(-1)*YN+(1+tau)*C+IP+TL.
Also, in the same paper, it is stated that the government’s flow budget constraint is thus
given as attachment. The government issues foreign-currency denominated debt, DGt
to finance its deficit. So I want to ask here is DG predetermined variable or not?
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attachment.pdf (50.5 KB)
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