I want to ask whether nominal variables can be used in my model, but each equation is divided by price. For example, the left and right sides of the equation are divided by price, as shown in the figure below. Because I know dynare needs a stable balance.
I am not sure I understand your question.
In your model, you can use nominal variables.
The equation as you shown is right, but if you would like to put it in Dynare, you should adjust formation of foreign wage and foreign bonds.
Best!
This formula comes from an article I need to reproduce.
I have found the problem of foreign wages, and I have always doubted the form of foreign bonds. Can you tell me how to adjust the form of foreign bonds? I want to see if it is consistent with my suspicion.
My question is to input the formula in the picture into dynare, regardless of the economic meaning, will there be bugs? Obviously, the variables in the picture are nominal variables.
You could implement the model in nominal terms. But usually, we don’t care about nominal variables, just the real ones. In that case, you may want to transform everything to real terms. The main trick here is to rewrite
\frac{B_{t-1}}{P_t} as \frac{B_{t-1}}{P_{t-1}}\frac{P_{t-1}}{P_t}=\frac{B_{t-1}^r}{\Pi_t}, where \Pi_t is inflation.