Generating a capital stock within model object

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tomukas
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Joined: Thu Mar 31, 2016 6:15 am

Generating a capital stock within model object

Postby tomukas » Fri Apr 01, 2016 12:29 am

Dear all,

I would like some help with creating a capital stock within the Eviews 8 model object. I do have an estimate for the initial capital (K_0). How can I command Eviews (as an identity in the model object) to consider this first observation and then generate a capital stock series using the perpetual inventory method with a constant depreciation rate? Consider:

K = capital stock
I = fixed capital formation
d [delta] = 0.026

The evolution of the real capital stock is:

K_t+i = (1 - d)*K_t+i-1 + I_t+i

I have been struggling with the CUMSUM function but to no avail.

Thanks very much for your answer.

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