Discretionary optimal policy -- adding the ZLB?

General DSGE Modeling
1

Hi everyone,

I’m studying discretionary optimal policy in a model large enough that the first order conditions are too complicated to take by hand. Dynare has been very helpful, except I’d now like to add a ZLB, and I don’t think the discretionary policy options in Dynare were built to handle the case where optimization is subject to inequality constraints. Does anyone have any experience or examples adapting Dynare to accommodate those sorts of constraints?

Thanks for anything you’re able to share!

Best,
N2K2

2

Unfortunately, the Dennis algorithm cannot handle this. In case of e.g. Gali I had to do this manually:
https://github.com/JohannesPfeifer/DSGE_mod/blob/master/Gali_2015/Gali_2015_chapter_5_discretion_ZLB.mod