What are state variables?

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?


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.

Thanks Prof. Pfeifer.