Dear all,

I’ve got a weird error, when I’m doing the following thing:

- I want to have a model, in which the shock values are only smaller than one. The shock follows an AR(1) process. Say, A is the shock variable.
- So I use an approximation of the indicator function to achieve this: if the shock value (eps_A)
*(eps_A is declared with varexo in the dynare code)*is larger than one, set the shock value to one, otherwise use the actual shock value:

A = exp(eps_A)*(1-1/(1+exp(-500000*(exp(eps_A)-1)))) + 1/(1+exp(-500000*(exp(eps_A)-1)));

- If I do that with random variables, I got a wonderful data set, where the upper bound of the time series is 1.
- But if I do it with dynare, dynare gives me allways A’s bigger than 1.

Why is dynare doing that???

With best wishes,

Daniel