I ask for the following help:
I attempted to understand how the second-order approximation worked in Dynare. I specified a value for periods, provided the initial value close enough to the steady state and typed “steady”, so I generated a stochastic simulation starting from the steady state. Then I found the results of policy functions. Following the reference manual, I set down the following lines in Matlab:
Here zeros(5,1) means that I have 5 endogeneous state variables and that the difference of them compared to the steady state is zero since I simulate from the steady state. But the result of the simulation in the first period differs from the simulation conducted by Dynare, which was correct. I wonder where I made a mistake.