Hello everybody,
Could somebody explain to me how Dynare makes the difference between state variables and control variables?
Best,
Skander
Everything that has timing (-1) or earlier is a state variable, because at time (0), you cannot change it anymore with any of your choices.
Thank you for your answer. It makes sense now.
Sorry for bothering you again I have a follow up question.
In some instances my model is locally undetermined or doesn’t have a local equilibrium at all. Would it be ok, to change the set of set state variables such that the model is locally determined, even though some of the states are necessary for some agents to make decisions.