Dear Dynare users,

We are pleased to announce the release of Dynare 4.2.0.

This major release adds new features and fixes various bugs.

The Windows package is already available for download. The Mac and Linux packages should follow soon.

All users are strongly encouraged to upgrade.

This release is compatible with MATLAB versions ranging from 6.5 (R13) to 7.11 (R2010b) and with GNU Octave versions 3.0.x and 3.2.x (support for GNU Octave 3.4.x is not complete and will be added in the next minor release).

Here is the list of major user-visible changes:

* New solution algorithms:

- Pruning for second order simulations has been added, as described in Kim, Kim, Schaumburg and Sims (2008) [1,2]

- Models under partial information can be solved, as in Pearlman, Currie and Levine (1986) [3,4]

- New nonlinear solvers for faster deterministic simulations and steady state computation [5]

* Dynare can now use the power of multi-core computers or of a cluster of computer using parallelization [6]

* New features in the user interface:

- A steady state file can now be automatically generated, provided that the model can be solved analytically, and that the steady state as a function of the parameters is declared with the new "steady_state_model" command [7]

- For non-stationary models, Dynare is now able of automatically removing trends in all the equations: the user writes the equations in non-stationary form and declares the deflator of each variable. Then Dynare perform a check to determine if the proposed deflators are compatible with balanced growth path, and, if yes, then it computes the detrended equations [8]

- It is now possible to use arbitrary functions in the model block [9]

* Other minor changes to the user interface:

- New primitives allowed in model block: normpdf(), erf()

- New syntax for DSGE-VAR [10]

- Syntax of deterministic shocks has changed: after the values keyword, arbitrary expressions must be enclosed within parentheses (but numeric constants are still accepted as is)

* Various improvements:

- Third order simulations now work without the "USE_DLL" option: installing a C++ compiler is no longer necessary for 3rd order

- The HP filter works for empirical moments (previously it was only available for theoretical moments)

- "ramsey_policy" now displays the planner objective value function under Ramsey policy and stores it in "oo_.planner_objective_value"

- Estimation: if the "selected_variables_only" option is present, then the smoother will only be run on variables listed just after the estimation command

- Estimation: in the "shocks" block, it is now possible to calibrate measurement errors on endogenous variables (using the same keywords than for calibrating variance/covariance matrix of exogenous shocks)

- It is possibile to choose the parameter set for shock decomposition [11]

- The diffuse filter now works under Octave

- New option "console" on the Dynare command-line: use it when running Dynare from the console, it will replace graphical waitbars by text waitbars for long computations

- Steady option "solve_algo=0" (uses fsolve()) now works under Octave

* For Emacs users:

- New Dynare mode for Emacs editor (contributed by Yannick Kalantzis)

- Reference manual now available in Info format (distributed with Debian/Ubuntu packages)

* Miscellaneous:

- Deterministic models: leads and lags of two or more on endogenous variables are now substituted by auxiliary variables; exogenous variables are left as is [12]

[1] Kim, J., S. Kim, E. Schaumburg and C.A. Sims (2008), "Calculating and using second-order accurate solutions of discrete time dynamic equilibrium models", Journal of Economic Dynamics and Control, 32(11), 3397-3414 [2] It is triggered by option "pruning" of "stoch_simul" (only 2nd order, not available at 3rd order) [3] Pearlman J., D. Currie and P. Levine (1986), "Rational expectations models with partial information", Economic Modelling, 3(2), 90-105 [4] http://www.dynare.org/DynareWiki/PartialInformation [5] http://www.dynare.org/DynareWiki/FastDeterministicSimulationAndSteadyStateCo... [6] http://www.dynare.org/DynareWiki/ParallelDynare [7] See the entry for "steady_state_model" in the reference manual for more details and an example [8] http://www.dynare.org/DynareWiki/RemovingTrends [9] http://www.dynare.org/DynareWiki/ExternalFunctions [10] http://www.dynare.org/DynareWiki/DsgeVar [11] http://www.dynare.org/DynareWiki/ShockDecomposition [12] http://www.dynare.org/DynareWiki/AuxiliaryVariables

On behalf of the Dynare team,