Journal Article

Sticky Information Models in Dynare

Authors

  • Fabio Verona
  • Maik Wolters
Publication Date

Macroeconomic models with sticky information include an infinite number of lagged expectations.

Several authors have developed specialized solutions algorithms to solve these models under rational expectations. We demonstrate that it is also possible to implement this class of models in Dynare – a widely used software package for solving dynamic stochastic general equilibrium (DSGE) models. Using the Dynare macro language one can easily construct and change the required large number of lagged expectation terms. We assess the accuracy of simulations run with different truncation points for the lagged expectations terms and find that the solution is reasonably precise even for moderate truncation points.

Info

JEL Classification
C54, C63

Key Words

  • Dynare
  • lagged expectations
  • macro-processor
  • sticky information