Tune Endogenous Variable, then Keep Endogenous After


#1

Hello,

I’m hoping to get some suggestions for how to do deterministic simulation in Dynare, in which I want to tune an endogenous variable for some period, but then have become endogenous again in other periods. I have tried to find an answer to this question in the Dynare reference, but without luck.

Thank you in advance.


#2

You might be able to work with an endogenous indicator that takes the value 0 if the endogenous variable is shut off and is 1 if not:

var y_endo;
varexp y_exo;
...
y=Indicator*y_exo+(1-Indicator)*y_endo

The problem is that such models are hard to solve because the indicator creates discontinuity