I am trying to stimate a model for the colombian economy. I’ve been following a paper from BIS. On page 14 you can find some long-term relations that I guess works as initial values. However, I’m not sure how to introduce data, for instance I don’t know if data should be in levels or as percentage of gdp as it is in page 14. In page 27 you can find information about data.

colombia bis.pdf (1.2 MB)

The important sentences are on page 14/15:

The data used in the estimation is expressed in quarterly growth rates and is assumed to have a

measurement error

So they use first differences for the variables listed after that sentence. That deals with non-stationary variables.

For the stationary ones after

Additionally we included

they simply use the level.

oh thank you, the table distracted me. Two last questions

1.About the inflation rate and interest rate. In page 12 set a value for the long-term parameters related to those variables. So, for the international interest rate is 2.5% and for the inflation rate is 3%. However, in table 1 page 13 they set up different values, for instance, for the international interest rate is 1.0062 and for the inflation rate is 1.0074. I don’t know why.

2. In page 25 equation 78 there is an expected value in t minus one about one variable in t. How can I introduce that kind of equation in dynare.

Thank you

Thank you for your answers