Shocks in Deterministic Context

Perfect foresight simulations
1

Hi everyone,

In the manual, we have a code example like this:

xx = [1.2; 1.3; 1];

shocks;

var e;

periods 1:3;

values (xx);

end;

Does this mean that agents know the entire future path of e period 1, or does it imply that they reset the perfect foresight equilibrium in each period?

Best wishes,

Yz

2

The above syntax is for perfect foresight, which means the full path of shocks is known in period 1. If you want to have agents learn the shocks in each period, you need to use perfect_foresight_with_expectation_errors_solver with the learnt_in option of the shocks block. See the manual.

3

Thank you very much, Johannes.