# Transition dynamics for exchange rate regime switch

**URL:** <https://forum.dynare.org/t/transition-dynamics-for-exchange-rate-regime-switch/5208>\
**Category:** Dynare help (legacy posts)\
**Created:** [3 January 2016 14:37 UTC](https://forum.dynare.org/t/transition-dynamics-for-exchange-rate-regime-switch/5208 "2016-01-03T14:37:08Z")\
**Posts on this page:** 6\
**Page:** 1

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**Author:** ![jameszhow1985](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/8baadc/32.png) [@jameszhow1985](https://forum.dynare.org/u/jameszhow1985)\
**Post date:** [3 January 2016 14:37 UTC](https://forum.dynare.org/t/transition-dynamics-for-exchange-rate-regime-switch/5208/1 "2016-01-03T14:37:08Z")

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Hi professor Pfeifer

```
  I want to do a transition experiment. As some shock hits the economy, it deviates from the steady state.After some periods(assuming at period 15), I switch to a different exchange rate regime specified by different parameters, which can accelerate the economy back to its original steady state. My question is how to implement the switch at some period in dynare ?

 Suggestions from others are also appreciated. Thanks in advance. Have a nice day.
```

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [10 January 2016 17:05 UTC](https://forum.dynare.org/t/transition-dynamics-for-exchange-rate-regime-switch/5208/2 "2016-01-10T17:05:35Z")

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Depends on whether your exercise is perfect foresight or not. In perfect foresight, see [[Permanent Shock to a Parameter](https://forum.dynare.org/t/permanent-shock-to-a-parameter/3394/1)). For a stochastic environment, see the discussion in [[Using dummy variables in dynare](https://forum.dynare.org/t/using-dummy-variables-in-dynare/4539/1))

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**Author:** ![jameszhow1985](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/8baadc/32.png) [@jameszhow1985](https://forum.dynare.org/u/jameszhow1985)\
**Post date:** [12 January 2016 16:01 UTC](https://forum.dynare.org/t/transition-dynamics-for-exchange-rate-regime-switch/5208/3 "2016-01-12T16:01:33Z")

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Hi.professor pfeifer

```
 I want to do an experiment of current accout reversal. As US runs substantial current account deficit, I want to reverse US current account and simulate the model from deficit instead of steady state. I do this simulation using two approaches. One is specifying values of state variables in the histval block. The other is using simult_ function. Which way do you think is preferable?
```

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [14 January 2016 09:47 UTC](https://forum.dynare.org/t/transition-dynamics-for-exchange-rate-regime-switch/5208/4 "2016-01-14T09:47:35Z")

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That depends on the setup. What you describe seems to be a simple transition from a starting point back to steady state. This is done with the initval/histval block. If you are thinking about a true regime switch where something completely exogenous suddenly permanently changes, you should go for the simult\_ approach.

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**Author:** ![jameszhow1985](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/8baadc/32.png) [@jameszhow1985](https://forum.dynare.org/u/jameszhow1985)\
**Post date:** [19 January 2016 07:15 UTC](https://forum.dynare.org/t/transition-dynamics-for-exchange-rate-regime-switch/5208/5 "2016-01-19T07:15:45Z")

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Hi, professor Pfeifer

```
 I run into a problem as I perform a transition exercise in a context of perfect foresight. There are a couple of parameters whose values should be decided endogenously in the model , but they can not be included in the initval block. How should I fix this problem ?
```

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [19 January 2016 09:36 UTC](https://forum.dynare.org/t/transition-dynamics-for-exchange-rate-regime-switch/5208/6 "2016-01-19T09:36:33Z")

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What do you mean with

```auto

```