Add a Fiscal Block to Galí (2008, 2015) chap. 3

Hello everyone,
I would like to study a basic New-keynesian economy (Galí 2008/2015, chapter 3) with an additional fiscal block.

More specifically, the fiscal block should have the following properties:

  • Taxes remain lump-sum
  • Debt can be either real or nominal
  • Government pursues a primary fiscal target as a % of GDP to pay interest on debt and expenses
  • Debt/GDP is positive and stable in steady state

My goal is to calibrate the model using US data.

If possible, the model should not be log-linearized. Any suggestion on how to introduce this fiscal block? Any paper suggestion?

Thank very much in advance and would be great if someone could shed some light on this.