I am trying to model endogenous growth models using Dynare. I was hoping that detrending the model (by dividing my trending variables by the technology level) would allow me to use the dynare software. Unfortunately, though, I seem to be having trouble finding a steady state. Has anyone here attempted anything similar, say with Romer’s 1990 paper?
I have the same dilemma.
Let’s take an example with a basic representative agent model. The only difference to the usual is that the agent also chooses e (=education) so that the periodic utility function is of the form u=lnc + ln(1-n-e).
Let’s say I have the human capital accumulation equation of the form:
h(+1) = (1+e^gamma)*h;
How do I write this equation in Dynare?
You must write you model in a way that you are able to detrend it. Currently, this is not the case for the capital accumulation equation. To get an idea how this could look like, see the exogenous growth model in economics.sas.upenn.edu/~jesusfv/benchmark_DSGE.pdf.