What equations should be written in the model block?

General DSGE Modeling
1

Dear all, I read in a textbook that the “model” block’s equations include the results of constraint conditions and first-order derivatives.
But I saw some authors writing the results of first order derivatives after multiple changes in the “model” block, so I’m confused.
I would like to ask which equations should be written in the “model” block?

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2

You need a set of n equations in n unknowns that represent the full model. You can do equivalence transformations on theses equations like substituting out variables.

3

But how can I be sure that the equation I calculated should actually be written in it? Are there any rules? ~

4

Your typical problem involves as many first order conditions as variables. You need them all.

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5

Hi! I am a Master’s student and I am studying DSGE by my own, and my doubt is similar to this one: after I solve the agent’s problems (consumer, final and intermediate-good firms), I have a set of first order conditions… ok, those must be in the structural model, together with the market clearing conditions, but I still am short of one equation. Then I should include the law of motion of capital, right?

6

The law of motion for capital is a first order condition. It is the derivative with respect to the Lagrange multiplier attached to this constraint.

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