When solving a model file (under commitment for the sake of concreteness) is there any way to set the instability/indeterminacy/Blanchard-Kahn threshold and change it from the default 1.00 (as I understand) to say 1/sqrt(discount) or any other number?
Thanks a lot.
Why would you want to do that? Explosiveness happens when an eigenvalue is bigger than 1, not any other number.
It is useful to know for various reasons. With quadratic utility, everything which explodes not faster than 1/sqrt(discount) is “stable”. We know that commitment solution is unique. With some policy myopia it is still unique, as soon as it is slower than 1/sqrt)discount). So for debugging purposes for example, a possibility to change the threshold would be useful.
I realise this may not work as a default version for an “average user”, but I for example, simply need to know whether I am getting a “reasonable slowly exploding solution” or have made a mistake somewhere and the problem is deeper rather than “BK conditions are not satisfied”.
I am still not sure I understand. With perturbation techniques you are supposed to work with detrended, i.e. stationary models. The \beta is supposed to be the growth adjusted one. E.g. in DSGE_mod/RBC_baseline.mod at master · JohannesPfeifer/DSGE_mod · GitHub
the Euler equation has
That detrending shifts the stability region to 1.
That being said,
options_.qz_criterium is the threshold for considering something stable. The default for
options_.qz_criterium = 1+1e-6;
Many thanks! I know we deal with small deviations But for debugging purposes I need to be able to manipulate the threshold. Many thanks again!