I do hope that someone in this forum will help me. Please run the code I attach and it should work fairly. Notice that I use the option of risky steady state on the penultimate line. Now if you delete this line, the code also runs normally, yet the theoretical moments, especially the means, change totally. I do not know the reason, but anyway please tell me which one should be correct.
Thank you!
takereal.m (143 Bytes)
eqlossaversionnewelements.mod (2.4 KB)
That very much depends on what you are trying to achieve, i.e. whether you want to use the risky steady state or the deterministic one.
Dear Johannes,
This is exactly what puzzles me. I simply want to obtain an accurate theoretical mean. As far as I understand, whether or not to use the option of risky steady state matters for the point at which the Taylor expression expands. But I don’t know if evaluating at the risky or deterministic steady state gives me a better approximation.