# Some clarifications
**URL:** https://forum.dynare.org/t/some-clarifications/4064
**Category:** Dynare help (legacy posts)
**Created:** [29 July 2014 18:01 UTC](https://forum.dynare.org/t/some-clarifications/4064 "2014-07-29T18:01:35Z")
**Posts on this page:** 20
**Page:** 1
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [29 July 2014 18:01 UTC](https://forum.dynare.org/t/some-clarifications/4064/1 "2014-07-29T18:01:35Z")
I had some clarifications regarding specifying some variables,
1- Is it possible to specify a markov transition matrix for a variable ?
2- Is it possible to have an exogenous variable normally distributed with mean different from 0, which is not shocked ?
---
### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [5 August 2014 09:08 UTC](https://forum.dynare.org/t/some-clarifications/4064/2 "2014-08-05T09:08:03Z")
1. No. The shock processes in Dynare are continuous variables
2. This is equivalent to adding a constant to a mean 0 normally distributed variable. You can enter it this way.
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [20 August 2014 05:51 UTC](https://forum.dynare.org/t/some-clarifications/4064/3 "2014-08-20T05:51:00Z")
Thanks a lot.
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [20 August 2014 06:09 UTC](https://forum.dynare.org/t/some-clarifications/4064/4 "2014-08-20T06:09:20Z")
Thanks for you reply,
I’m trying to replicate this paper ([nber.org/papers/w19208.pdf](http://www.nber.org/papers/w19208.pdf)) with some modifications. Their appendix has the dynare code.
I have coded my model and I get the required steady states for the log-linear model.
I then convert the logged variables N, into its percentage level which is the rate of employment. I then subtract it from one to get the unemployment rates.
However, I am unable to estimate my parameters. I first got a remark that I should use the use\_calibration option with the estimated\_params\_init block. Once I did this the
next error was that “Cannot use parameter values from calibration as they violate the prior bounds”. I have tried it with “s” which is the job separation rate and “bet” the discount factor.
Both give the same errors,
I am wondering what the issue could be. My data file of unemployment rates has been attached too.
Regards,
Thanks in advance.
[shubh.mod](https://forum.dynare.org/uploads/default/original/2X/c/c2c45e46cfde591343f4df5ef7e84010bd400a4f.mod) (1.2 KB)
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [20 August 2014 06:16 UTC](https://forum.dynare.org/t/some-clarifications/4064/5 "2014-08-20T06:16:34Z")
I am unable upload my data file it seems, however the data is monthly unemployment rates from germany for the past 6 years.
---
### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [20 August 2014 07:05 UTC](https://forum.dynare.org/t/some-clarifications/4064/6 "2014-08-20T07:05:25Z")
Please upload everything in one zip-file.
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [20 August 2014 07:14 UTC](https://forum.dynare.org/t/some-clarifications/4064/7 "2014-08-20T07:14:25Z")
zip file
[shubh.zip](https://forum.dynare.org/uploads/default/original/2X/f/fc192248c949e960fdc57608550743be08896cdf.zip) (7.42 KB)
---
### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [20 August 2014 07:28 UTC](https://forum.dynare.org/t/some-clarifications/4064/8 "2014-08-20T07:28:40Z")
1. The shocks-block belongs before the estimation command, otherwise the variance will be set to 0 and use\_calibration will fail due to stochastic singularity of your calibration.
2. The data in the Excel file has no headers. I added them
3. You did not divide your unemployment rate in the data by 100 to make it equivalent to the variable in your model. I also did that.
A running version is attached.
[shubh.zip](https://forum.dynare.org/uploads/default/original/2X/6/661dde2a968b91d889c8401111679fba16927e37.zip) (9.12 KB)
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [24 August 2014 18:22 UTC](https://forum.dynare.org/t/some-clarifications/4064/9 "2014-08-24T18:22:32Z")
Thanks a lot. Also when we have the log-linear model the impulse responses are in terms of the log deviations from steady state which can be interpreted as percentage deviations. However, I was wondering if we could get the impulse responses in level terms. The log-variables converted into level terms also have the irf with 0 steady state, i was wondering how we could get the irf’s for the level variables in terms of the levels itself.
Regards,
---
### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [24 August 2014 19:16 UTC](https://forum.dynare.org/t/some-clarifications/4064/10 "2014-08-24T19:16:28Z")
Just add the steady state to them. You must do that manually. See the manual on where the steady states and the IRFs are stored.
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [27 August 2014 13:03 UTC](https://forum.dynare.org/t/some-clarifications/4064/11 "2014-08-27T13:03:37Z")
Thanks a lot, another query that I had is,
In my data if I have monthly data from 2007 on wards till 2014, then in my model if I shock my exogenous variable in the 12th period will it correspond to a shock in 2008 and be incorporated in the estimation process while using my data ?
Kind regards,
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [27 August 2014 16:55 UTC](https://forum.dynare.org/t/some-clarifications/4064/12 "2014-08-27T16:55:40Z")
Also, When I have one stochastic shock process and one deterministic shock (say in period 12), Is the deterministic shock anticipated or unanticipated ?
Is there any way to have an unanticipated shock in a later period such that agents dont respond to it during the first 11 periods ?
---
### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [27 August 2014 20:55 UTC](https://forum.dynare.org/t/some-clarifications/4064/13 "2014-08-27T20:55:07Z")
Maybe I am misinterpreting what you are asking. Please try to explain what you are trying to model.
First post: No, the specified deterministic shocks using varexo\_det do not enter estimation at all. The only information used during estimation is the data and all shocks are inferred from the data.
Second post: From the manual entry for varexo\_det
[quote]It is possible to mix deterministic and stochastic shocks to build models where agents know
from the start of the simulation about future exogenous changes.[/quote]
That means, there is perfect forsight here: the agents know at time 0 that there will be a one-time shock at time 12.
The “unanticipated shock in a later period such that agents dont respond to it during the first 11 periods” is just your standard stochastic shock.
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [29 August 2014 07:01 UTC](https://forum.dynare.org/t/some-clarifications/4064/14 "2014-08-29T07:01:40Z")
Thanks a lot Sir,
I mostly had doubts regarding what you explained and things are much clearer to me now, so thanks a lot.
Just to clarify
1 - What did you exactly mean by that all shocks are inferred from the data ? To what extent does the specification of the stochastic shocks matter as in its AR process and standard deviation in estimation.
2 - There is no way to have a surprise deterministic shock, because a fall in the deterministic shocks value in some period after the economy begins will always be taken into account in previous periods because of prefect foresight.
Regards,
---
### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [29 August 2014 08:47 UTC](https://forum.dynare.org/t/some-clarifications/4064/15 "2014-08-29T08:47:40Z")
1. With the shocks-block you specify the stochastic processes of the state-space system. The autocorrelation and variance of the processes is either fixed or estimated. But the actual shock realizations are estimated as the residuals from the state-space system.
2. Sorry, but I do not know that a “surprise determinstic shock” is. This is an oxymoron.
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [29 August 2014 19:54 UTC](https://forum.dynare.org/t/some-clarifications/4064/16 "2014-08-29T19:54:40Z")
Thank you, For the second point I meant If it was possible to have an unanticipated shock in the future ?
---
### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [29 August 2014 21:36 UTC](https://forum.dynare.org/t/some-clarifications/4064/17 "2014-08-29T21:36:46Z")
Estimation allows unanticpated shocks at any point in time in the future. If you are asking whether you can pre-specify the value of an unanticipated shock happening at a future point in time that is taken as given in estimation, the answer is no.
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [29 August 2014 22:08 UTC](https://forum.dynare.org/t/some-clarifications/4064/18 "2014-08-29T22:08:20Z")
What about the scope of pre-specified values of unanticipated shocks in the deterministic and stochastic models and just analyzing their transition to a new steady state ?
before any estimation takes place.
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [30 August 2014 03:57 UTC](https://forum.dynare.org/t/some-clarifications/4064/19 "2014-08-30T03:57:18Z")
Also regarding your paper -
[sites.google.com/site/pfeiferec … edirects=1](https://sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf?attredirects=1)
My model is calibrated with weekly estimates of parameters and the steady states correspond to the weekly real world values of endogenous variables.
However, my data is the monthly unemployment rate.
I was wondering if this would lead to spurious estimation results. But your paper mentions that for a stock variable the length of the model period or frequency does not matter. And since unemployment rate is an average or stock variable this should not affect the estimation. Am i correct ?
---
### Author:  [@shubh](https://forum.dynare.org/u/shubh)
#### Post date: [30 August 2014 21:31 UTC](https://forum.dynare.org/t/some-clarifications/4064/20 "2014-08-30T21:31:02Z")
Or should I use the kalman filter with missing data for some weeks as mentioned in your paper ?
My observations are monthly unemployment rates.
[Next page](https://forum.dynare.org/t/some-clarifications/4064.md?page=2)