Problem on techno shock

Hi everybody,

I am implementing the non-linear BGG model and I am confused about what’s happening to my technology shock…
Here is the idea:

The production function is:

 y          = ((techno*l)^(1-alpha))*(k^(alpha)); 

where the variable techno is defined as:

 (techno/technobar) - ((techno(-1)/technobar)^rhoTechno)*exp(eps_techno); 

with technobar=1 and rhoTechno=0.95

in initval, I specified:

techno      =  technobar;

and in shocks:

    var eps_techno = 0.1^2;

And, it seems that the shock has no impact on the dynamics (variance decomposition = 0 and IRF are not plotted).

I don’t see the problem… The .mod file is enclosed.

Thanks a lot!
model_FA.mod (5.77 KB)

Sorry, but your mod-file does not run. Apart from a missing bracket in

I am not aware that Dynare is able to deal with log-normal cdfs. Hence

is not recognized. Judging from the manual, you may have to rewrite everything in terms of a

See page 12 of the manual.

Thanks for the reply. yes, actually, the s.s computation is on another file and I have to use dynare V3.065 if I want to run cdf functions.
Actually, I found the problem, there were a mistake in the specification of the labor disutility function, it works with a CES-type utility function.
Thanks again,