Stochastic RBC baseline model, why is my investment dynamics so small?

Hi all,

Forgive me for the elementary question, I am a student in the process of learning Dynare. I am working through some early RBC models. I am working through the rbc_cooley.mod posted J. Fernandez-Villaverde on the Dynare website. When I compare my standard deviation of investment to the one that Cooley and Prescott report in their book, mine is much lower. The std. dev. of investment is also much lower than the std. dev.'s for both output and consumption which seems counter intuitive. Am I missing something here?


rbc_cooley.mod (1.8 KB)

The reason is that your file is in levels, but the typically reported standard deviations are for the percentage deviations/levels. You should add an auxiliary variable that stores the logs. See e.g.

Ah! you are correct. Complete overlooked this aspect. Thanks!