I am solving a NKM with diagnostic expectations and try to determine the optimal monetary policy in such a framework. I derived the new keynesian phillips curve (equation 1 in the model) and have an optimality condition coming from the central bank’s optimization problem (equation 2 in the model). For some parameter values the solution is indetermined so I am trying to map theses parameter values into a graph.
Therefore, I use the approach by Ascari/Sorbone (2014). However, running my code produces error messages that I do not understand. Maybe you could have a quick look on the piece of code. It is short, I promise.
Thanks and best regards!
determinancy_corrected.mod (1.6 KB)