What are state variables?

General DSGE Modeling
1

Hi all,

I am confused about the definition of state variables. My understanding is a state variable is determined at the beginning of period t and it will not be changed at this period. I did not find clear explanation from textbooks I read.

When I use the command M_.endo_names(M_.state_var) to see what are state variables in SW2007, it shows y (output), c (consumption) and r (nominal interest rate) are state variables. Should they be control variables?

Could anyone provide some explanation for state variables or some references?

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Regards,
Young

2

Yes, state variables are the ones that cannot be changed at time t anymore. Try running model_info in Dynare 5.3 to get a better printout. The display you generated is misleading because it does not provide information on the timing. c for example is not a state, but c(-1) is.

3

Thanks Prof. Pfeifer.