# Question about neoclassical growth model in the Practicing Dynare_2019(updated version)

Hi,
I am trying to replicate the models in the “Practicing Dynare 4.5.6”.

In Chapter 2 The Neoclassical Growth Model, the equilibrium equations for approximation are
(c^the * (1-lab)^(1-the))^(1-tau) / c = bet * (c(+1)^the * (1-lab(+1))^(1-the))^(1-tau) / c(+1) * (1 + alpexp(z(-1)) k(-1)^(alp-1) * lab^(1-alp) - del);
c = the / (1-the) * (1-alp) * exp(z(-1)) * k(-1)^alp * lab^(-alp) * (1-lab) ;
k = exp(z(-1)) * k(-1)^alp * lab^(1 - alp) - c + (1 - del) * k(-1);

The equilibrium equations for estimation are:
(c^the * (1-lab)^(1-the))^(1-tau) / c = bet * (c(+1)^the * (1-lab(+1))^(1-the))^(1-tau) / c(+1) * (1 + alp*exp(z(+1)) * k^(alp-1) * lab(+1)^(1-alp) - del);
c = the / (1-the) * (1-alp) * exp(z) * k(-1)^alp * lab^(-alp) * (1-lab);
k = exp(z) * k(-1)^alp * lab^(1-alp) - c + (1-del)*k(-1);

What are the economic implications/considerations for the differences (e.g. using exp(z(-1)) in the consumption equation for approximation but exp(z) in the consumption equation for estimation)? Any information will be helpful. Thank you very much.

Hi DZZZ,

I just checked the file and z_t is the process for productivity, hence the first version does not make sense as productivity is not predetermined, and you should use the second one. I guess it is just a typo. Of course, the setup for simulation and estimation should be identical.

Best

Thank you very much, DoubleBass!