Thank you for your efforts!! Your videos are abundantly helpful for beginners and so are your slides and notes available on your website. I am losing my fear of Dynare and Matlab coding and gaining some confidence, thanks to your videos. I highly appreciate your work, sir!!
Dear Prof. Mutschler, I really appreciate your in depth videos and lectures. Here you mention future videos on linearization by hand and if you should do it. Is the video concerning this topic already available ? If not, notes or a future video would be appreciated. - Thomas
This is really helpful !!!! Life saver for my macro Theory!!! I am wondering which playlist in your channel would be considered Advanced Macroeconomics II (Part I)
Hello, thank you for the tutorial. Sadlly after installing (basic-)TEX my latex files aren't compiled immediately. Is there any guide or reference for setting up pdflatex for this application? thank you !
Great video! While profits are described in the HH's budget constraint, they are omitted in the Lagrangian. Is there any reason for that? If profits were included, would it make any difference?
Hi... I really appreciate your great job. I have installed Latex and when I run your codes(from the description), it gives me " 'pdflatex' is not recognized as an internal or external command operable program or batch file." error. please guide me how can I fix it. please introduce a resources to study more about macroeconomics that you are presenting about. thanx in advance
The tex files are created by using the dynare commands. You can then simply open them with your favorite Latex editor and compile them. Alternatively, if pdflatex is in your PATH, then the system command can be used. Note that this depends which operating system you are working on: git.dynare.org/Dynare/dynare#optional-pass-the-full-path-to-matlab-to-run-system-commands
Hi!!! i have a problem with the last part of the code...: if system ([`/Library/TeX/texbin/pdflatex -halt-on-error -interaction=batchmode` M_.fname`TeX_binder.tex`]) `Text-File did not compile; you need to compile it manually `) end A am a macOS user. the error is: Error using RBC_nonlinear.driver Error: File: driver.m Line: 228 Column: 90 Invalid expression. Check for missing multiplication operator, missing or unbalanced delimiters, or other syntax error. To construct matrices, use brackets instead of parentheses. Error in dynare (line 293) evalin('base',[fname '.driver']) ;
Thanks a lot. Really like your illustration! May I ask you one question: At 14:20-15:35, you say transversality conditions is a boundary condition, which can make us focus on first-order conditions without the need to look at second-order derivatives., may I know what first-order conditions you refer to, is it the model equations we get from the model maximization problem? E.g. Euler equation comes from the FOC of household utility. So, does it mean the transversality condition makes the Euler equation meaningful? I am also a little confused about what boundary is it, for which variable and how the transversality condition can make us only need to focus on FOC, may I have some intuition behind this conclusion. I am thinking FOC equals zero is enough for any concave function to be the maximum.
Yes for concave functions and bounded sets on which you are optimizing on. However, we have an infinite planning horizon and for this we need the transversality conditions, because otherwise we could end up in situations where debt is never repaid etc.
Thank you so much, this video is really good it has helped me alot. Can you please help me on exogenous variables am finding errors. How do u put them in the model when u already have values for them
Do you mean, when we do perturbation 1st order? The reason there is that we use the implicit function theorem and the steady-state is a natural choice because we know how to compute it and we know that it is also a function of the true but unknown policy function. But conceptionally, you can do Taylor approximation at any point. Sometimes people use a concept called the stochastic steady-state to approximate around. But that is rather advanced.
Thanks for this tutorial, it was not clear why to differentiate part of the second equation in the minute 20:09-22:00. Throughout the presentation you were considering equation 1, when j=0, that is for C, I, L. But for K you used J=1, is there a specific reason?
Thanks for your tutorial. I'm working on Open DSGE modelling. I have been viewing your videos many many times. Confused with firm maximisation of expected profits is normal discount factor x stochastic discount factor x profits of representative firm (in real terms). Can you explain the rational behind?
Firms want to maximize lifetime profits, because typically they assume that they will "produce forever" (or don't have a rationale to go bankrupt). So the planning horizon is infinite. To compare the VALUE of profits in some future period with the VALUE of today's profits one has to discount the future profits with a discount factor. As firms are assumed to be owned by households, we make use of the Euler-Equation of savings for the households to measure the VALUE of profits, and we call this the stochastic discount factor.
Is it possible to use SMM to match moments without specifying a data-file? For example, if I want to match the variance of consumption, is it possible to match it by specifying it directly or does it have to be computed from a data file?
It has to be computed for a datafile. What you have in mind is called calibration. Have a loot at my advanced calibration video where you flip variables and parameters. Create a new variable which is the square of consumption and then find the parameter(s) most relevant to target a specific value of that.
In general j=0 could have an impact on future profits, but in the RBC model this is not the case, it is just a static optimization problem. Each period the firm decides on labor and capital used and this decision has no impact on future periods. In the New-Keynesian model with say Calvo price rigidities this is different as there is a probability that firms are stuck with their price for a certain amount of time.
Hello, can someone help me at designating the steady-state variables in Dynare? In my non-linear system, I have variables in various periods (e.g. k and k(+1)), as well as variables that aren’t set in any specific time period.
How can i save into pdf file with windows? Help me please. The error code is: The system can not find the path specified. Warning: TeX-File did not compile; you need to compile it manually > In RBC_nonlinear.driver (line 230) In dynare (line 281) Total computing time : 0h00m00s Note: warning(s) encountered in MATLAB/Octave code
I can't find the right words to thank you sir I am working on the coordination between fiscal and monetary policy and I do not know how to build my own model can you help me please I am in trouble Thank you very much
Building your own models is an art and requires experience. You are better advised to take a model from the literature and start making very subtle and slight changes to understand the model dynamics.
Thank you for your efforts!! Your videos are abundantly helpful for beginners and so are your slides and notes available on your website. I am losing my fear of Dynare and Matlab coding and gaining some confidence, thanks to your videos. I highly appreciate your work, sir!!
That's good to hear.
thank you so much for your video！we don’t have DSGE class in our school, I learn a lot from your video!thanks from China❤️
Good that it helped.
Great material! Thank you professor Mutschler!
Thx!
Many thanks i'm looking for this for a long time ,there no one provide and did a same job,keep it on.
Glad it is helpful
We highly appreciate your efforts
Thanks!
Thank you, professor, for the tutorial.
Sure.
Dear Prof. Mutschler, I really appreciate your in depth videos and lectures. Here you mention future videos on linearization by hand and if you should do it. Is the video concerning this topic already available ? If not, notes or a future video would be appreciated. - Thomas
I have touched on this in my lecture series github.com/wmutschl/Computational-Macroeconomics
amazing presentation. really useful
Thank you!
Very clear and useful video. Thanks
Thanks!
I just want to let you know that we love you so much
THanks.
Excellent video, thanks!
Thx!
This is really helpful !!!! Life saver for my macro Theory!!! I am wondering which playlist in your channel would be considered Advanced Macroeconomics II (Part I)
Thank you for this video!! It’s great!
Thanks for watching.
I was waiting for this ❤️. Thank you.
No problem!
Unrelated but how did you came up with the values of the parameters at around the 36 min. mark?
Have a look here: mutschler.eu/dynare/intro-dsge-dynare/rbc_video_calibration/
Hello, thank you for the tutorial. Sadlly after installing (basic-)TEX my latex files aren't compiled immediately. Is there any guide or reference for setting up pdflatex for this application? thank you !
Excellent videos
Thx!
Great video! While profits are described in the HH's budget constraint, they are omitted in the Lagrangian. Is there any reason for that? If profits were included, would it make any difference?
A great job! Thank you! One doubt at 13min: 0
Hi... I really appreciate your great job. I have installed Latex and when I run your codes(from the description), it gives me " 'pdflatex' is not recognized as an internal or external command operable program or batch file." error. please guide me how can I fix it.
please introduce a resources to study more about macroeconomics that you are presenting about. thanx in advance
Nice video!
Thank you!
Thanks for all your efforts.
Could you please quickly mention how you initially get the pdf file at the last quarter of the video?
The tex files are created by using the dynare commands. You can then simply open them with your favorite Latex editor and compile them. Alternatively, if pdflatex is in your PATH, then the system command can be used. Note that this depends which operating system you are working on: git.dynare.org/Dynare/dynare#optional-pass-the-full-path-to-matlab-to-run-system-commands
Hi!!! i have a problem with the last part of the code...:
if system ([`/Library/TeX/texbin/pdflatex -halt-on-error -interaction=batchmode` M_.fname`TeX_binder.tex`])
`Text-File did not compile; you need to compile it manually `)
end
A am a macOS user. the error is:
Error using RBC_nonlinear.driver
Error: File: driver.m Line: 228 Column: 90
Invalid expression. Check for missing multiplication operator, missing or unbalanced delimiters, or other
syntax error. To construct matrices, use brackets instead of parentheses.
Error in dynare (line 293)
evalin('base',[fname '.driver']) ;
I uploaded the description of the video where you can find the mod file. Try to run this and check whether you run into issues with that.
@@wmutschl thx so much!!! is woking perfect right now!!!!!
Thanks a lot. Really like your illustration! May I ask you one question:
At 14:20-15:35, you say transversality conditions is a boundary condition, which can make us focus on first-order conditions without the need to look at second-order derivatives., may I know what first-order conditions you refer to,
is it the model equations we get from the model maximization problem? E.g. Euler equation comes from the FOC of household utility. So, does it mean the transversality condition makes the Euler equation meaningful?
I am also a little confused about what boundary is it, for which variable and how the transversality condition can make us only need to focus on FOC, may I have some intuition behind this conclusion.
I am thinking FOC equals zero is enough for any concave function to be the maximum.
Yes for concave functions and bounded sets on which you are optimizing on. However, we have an infinite planning horizon and for this we need the transversality conditions, because otherwise we could end up in situations where debt is never repaid etc.
Thank you so much, this video is really good it has helped me alot. Can you please help me on exogenous variables am finding errors. How do u put them in the model when u already have values for them
thanks, Professor for the tutorial. why do we approximate the first-order conditions around the steady state?
Do you mean, when we do perturbation 1st order? The reason there is that we use the implicit function theorem and the steady-state is a natural choice because we know how to compute it and we know that it is also a function of the true but unknown policy function. But conceptionally, you can do Taylor approximation at any point. Sometimes people use a concept called the stochastic steady-state to approximate around. But that is rather advanced.
Thanks for this tutorial, it was not clear why to differentiate part of the second equation in the minute 20:09-22:00. Throughout the presentation you were considering equation 1, when j=0, that is for C, I, L. But for K you used J=1, is there a specific reason?
Because K_t appears not only for j=0, but also for j=1.
Thank you for the great job, At 4:45 please can you explain me how derive the functional forms of CES utility. is there the unique form??
Have a look at mutschler.eu/dynare/best-practices/steadystate/
Thanks for your tutorial. I'm working on Open DSGE modelling. I have been viewing your videos many many times. Confused with firm maximisation of expected profits is normal discount factor x stochastic discount factor x profits of representative firm (in real terms). Can you explain the rational behind?
Firms want to maximize lifetime profits, because typically they assume that they will "produce forever" (or don't have a rationale to go bankrupt). So the planning horizon is infinite. To compare the VALUE of profits in some future period with the VALUE of today's profits one has to discount the future profits with a discount factor. As firms are assumed to be owned by households, we make use of the Euler-Equation of savings for the households to measure the VALUE of profits, and we call this the stochastic discount factor.
Perfect
Thanks!
Is it possible to use SMM to match moments without specifying a data-file? For example, if I want to match the variance of consumption, is it possible to match it by specifying it directly or does it have to be computed from a data file?
It has to be computed for a datafile. What you have in mind is called calibration. Have a loot at my advanced calibration video where you flip variables and parameters. Create a new variable which is the square of consumption and then find the parameter(s) most relevant to target a specific value of that.
Could you explain how you decided that present decisions of firms j=0 don't impact decisions of j=1?
In general j=0 could have an impact on future profits, but in the RBC model this is not the case, it is just a static optimization problem. Each period the firm decides on labor and capital used and this decision has no impact on future periods. In the New-Keynesian model with say Calvo price rigidities this is different as there is a probability that firms are stuck with their price for a certain amount of time.
Hello, can someone help me at designating the steady-state variables in Dynare? In my non-linear system, I have variables in various periods (e.g. k and k(+1)), as well as variables that aren’t set in any specific time period.
I think you have something fundamentally wrong. Please watch my video on steady-state computations and have a look at the Dynare forum.
one very basic question. How do i install the database from excel to dynare. ??
Have a look in the manual, it depends on the command you run, but you can import data from excel with Dynare.
My mod file doesn’t show any colour… what do you think is the problem?
Same here, it has something to do with Matlab 2023b or MacOS, this will be fixed in Matlab 2024a or you can use 2023a instead.
How can i save into pdf file with windows? Help me please.
The error code is:
The system can not find the path specified.
Warning: TeX-File did not compile; you need to compile it manually
> In RBC_nonlinear.driver (line 230)
In dynare (line 281)
Total computing time : 0h00m00s
Note: warning(s) encountered in MATLAB/Octave code
I also have the same issue.
Well it seems like you don't have latex installed. Install it and open the .tex files and compile them.
I can't find the right words to thank you sir
I am working on the coordination between fiscal and monetary policy and I do not know how to build my own model can you help me please I am in trouble
Thank you very much
Building your own models is an art and requires experience. You are better advised to take a model from the literature and start making very subtle and slight changes to understand the model dynamics.