Hello

I am trying to loop over parameter values for a simple Taylor rule and then perform a stochastic simulation using stoch_simul so that I can extract the mean values for consumption (which will be used in a comparison with a Ramsey policy outcome later on). I run a 2nd order approximation and I get that the mean of consumption is a negative number when the parameter value for inflation takes on a value close to 1.

The loop (that I found on this forum) looks like:

[code]phi_ys= 0:0.1:5;

phi_pis = 0:0.1:5;

first_time = 1;

res_alt=cell(length(phi_ys), length(phi_pis));

param_values_alt=cell(length(phi_ys), length(phi_pis));

mean_values_alt=cell(length(phi_ys), length(phi_pis));

for i=1:length(phi_ys)

for j=1:length(phi_pis)

if first_time

set_param_value(‘phi_y’,phi_ys(i));

set_param_value(‘phi_pi’,phi_pis(j));

dynare NK_hysterisis noclearall;

first_time = 0;

else

set_param_value(‘phi_y’,phi_ys(i));

set_param_value(‘phi_pi’,phi_pis(j));

info = stoch_simul(var_list_);

if info ==0;

res_alt{i,j} = oo_;

mean_values_alt{i,j} = res_alt{i,j}.mean(3); % Mean of consumption is the third value in the order.

param_values_alt{i,j} = M_.params;

else

fprintf('model cannot be solved for phi_y=%3.2f and phi_pi=%3.2f\n ',phi_ys(i), phi_pis(j));

end;

end

end

end

[/code]

The loop works as expected with regards to changing the parameter values properly but the outcome is odd. In the .mod-file I have a “steady_state_model”-block which solves the model without any non-zero residuals so I believe that there is something wrong with the way I perform the stochastic simulations. As far as I’ve understood it, when the full Dynare routine is used in the first iteration the stoch_simul command in the loop will use the options provided in the stoch_simul included in the .mod-file. The options used are

```
stoch_simul(noprint, nograph, irf=0, pruning, drop=200, replic=1000, order=2);
```

I am not sure whether it is something I am missing about the stochastic simulation or if there is something else going on.

Help would be much appreciated.