Hi,

I’m new with Dynare and I’m trying to model a stochastic shocks, say x(t), which takes the values of 1 or zero at each point in time. x(t) takes the value of 1 with probability p(t)=f[y(t-1)], where y(t) is an endogenous variable. I really don’t know how to write this in Dynare, can someone help me to go trough this step?

[in the simplest case we have f=(r_A-r_F)B(-1), with r_A and r_F given (and constant)]

best,