Hi,
I tried to simulte an AR(1) equation in dynare with a growth factor. I plotted several stochastic simulations, but I don’t see the growth although it should clearly increase as time elapses. Can you interpret the periods in the stochastic simulations as time in dynare?
See the model:
Simplified2.mod (4.9 KB)
Your AR-process does not have a trend. It is still stationary. However, if it really did have a trend, no steady state would exist and you could not use stoch_simul. In such cases, you must work with a detrended, stationary model and then add back the trend.
Thank you. Do you maybe have an example?
https://github.com/JohannesPfeifer/DSGE_mod/blob/master/Aguiar_Gopinath_2007/Aguiar_Gopinath_2007.mod does something like that.
Thank you. My objective is to find the influence on investment, consumption etc. of increasing life expectancy. Therefore I think that an extended path might be a good way to provide these insights, instead of ivfs.
In the following mod file I added aging (so increasing life expectancy). Is there a way that I can include the fact that agents see the trend in aging, but not the shocks? I have now inserted that agents include the current mortality in their decision to spend etc. (in the euler equations).
Moreover, I have a question about extended_path. Although I loop over set_dynare_seed(i), I do not get a different random shocks path in each iteration.
See:
Simplified2.mod (5.3 KB)