Is the method correct to get predictions? Can we compute predictions without initial value?
var
c l k w r iv y
;
parameters
ALPHA
BETA
DELTA
b
;
% parameters caliberation
ALPHA = 0.35;
BETA = 0.99;
DELTA = 0.025;
b = 2;
% parameters caliberation
ALPHA = 0.35;
BETA = 0.99;
DELTA = 0.025;
b = 2;
model;
c (+1)/c= BETA * (1+ r (+1) - DELTA (+1));
1-l/c = b/w;
r = 1/k;
w = 1/l;
c = y - iv;
iv = (k (+1) - (1-DELTA) * k);
y = log (k) + log (l);
end;
% computation
initval;
c = 0.3;
l = 0.2;
k = 4;
w = 1;
r = 1/BETA-1;
iv = 1;
y = 1;
end;
perfect_foresight_setup (periods = 10);
perfect_foresight_solver;
rplot c;