kstate

Hi,

I was wondering if somebody can explain to me the structure of kstate? I am aware that using this is depreciated, as this is a reminiscence of old dynare versions where we did not create auxiliary variables for leads and lags greater than one, but still I find it is used in several functions dealing with e.g. the perturbation solution or identification toolbox. In any case, I still have problems to get the hang of this. So maybe someone can help me out, given the following simple example:

var Y C K A;
varexo eps_A;    
parameters alph betta rhoA sigA;
alph  = 0.35; betta = 0.99; rhoA  = 0.9; sigA  = 0.6;
model;
C^(-1)=alph*betta*C(+1)^(-1)*A(+1)*K^(alph-1);
K=A*K(-1)^alph-C;
log(A)=rhoA*log(A(-1))+sigA*eps_A;
Y = A*K(-1)^alph;
end;

As I understand, my state variables are K and A, i.e.

• the declaration order is Y C K A
• the DR order is Y K A C
• lead_lag_incidence is equal to

	Y	C	K	A
t-1	0	0	1	2
t	3	4	5	6
t+1	0	7	0	8

where the number corresponds to the corresponding column number in the dynamic files (i.e. derivative wrt the variable)

Now, the kstate variable is given by:

3	3	4	0
4	3	3	0
2	2	0	1
3	2	0	2

but I do not understand this. As far as I see, there is only one comment in set_state_space.m:

% composition of state vector
% col 1: variable;           col 2: lead/lag in z(t+1);
% col 3: A cols for t+1 (D); col 4: A cols for t (E)

but what is the meaning of z(t+1), A, D and E or to which state space representation do these correspond to?

Thanks!