Node:Shocks on exogenous variables, Next:Computations and simulations, Previous:Initial and terminal conditions, Up:Commands
In a deterministic context, when one wants to study the transition of one equilibrium position to another, it is equivalent to analyze the consequences of a permanent shock and this in done in DYNARE through the proper use of initval
and endval
.
Another typical experiment is to study the effects of a temporary shock after which the system goes back to the original equilibrium (if the model is stable ...). A temporary shock is a temporary change of value of one or several exogenous variables in the model. Temporary shocks are specified with the command shocks
.
In a stochastic framework, the exogenous variables take random values in each period. In DYNARE, these random values follow a normal distribution with zero mean, but it belongs to the user to specify the variability of these shocks. The non-zero elements of the matrix of variance-covariance of the shocks can be entered with the shocks
command. Or, the entire matrix can be direclty entered with Sigma_e
. Note that, starting with version 2.5.2, the direct specification of the internal matrix Sigma_e_, prone to errors, is discouraged.