Anticipated forward guidance shock in monetary policy

Macro-language
1

Hello everyone.

I am currently studying Del Negro et al. (2012): The Forward Guidance Puzzle. I want to build a similar model in Dynare, including the anticipated forward guidance shock in monetary policy, like the following equation:

image
image1111×174 4.78 KB

However, I find the last term image is very difficult to express in Dynare.

I tried using loops in the Macro Definition, but it didn’t seem to work. I’m also not sure if this approach is suitable for running the anticipated forward guidance shock.

I would greatly appreciate any advice on how to represent the last term of the monetary policy image in Dynare.
Thank you very much.

2

A macro loop should work. What was the problem you faced?

3

taylor_rule.mod (427 Bytes)

Thank you so much for replying Professor!
Attached with the taylor rule code.
My MATLAB reports the following error:

image
image872×250 8.09 KB

Could you please give me some suggestions on how to modify this code?
Besides, can I run the code without define the value of L?

Many thanks!

4

The problem is not the macro loop but rather that you did not implement the other equation. You are e.g. missing equations determining inflation and the output gap. Use the savemacro option to see what your file generates. I fixed two minor issues.

taylor_rule.mod (368 Bytes)

5

Thank you so much Professor!
I tried again and it worked. I really appreciate your help.
Hope you have a great day!