# Discretionary policy DSGE

**URL:** <https://forum.dynare.org/t/discretionary-policy-dsge/17846>\
**Category:** Optimal Policy\
**Created:** [9 April 2021 19:55 UTC](https://forum.dynare.org/t/discretionary-policy-dsge/17846 "2021-04-09T19:55:23Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![Ani98](https://forum.dynare.org/letter_avatar_proxy/v4/letter/a/bcef8e/32.png) [@Ani98](https://forum.dynare.org/u/Ani98)\
**Post date:** [9 April 2021 19:55 UTC](https://forum.dynare.org/t/discretionary-policy-dsge/17846/1 "2021-04-09T19:55:23Z")

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Hi, I’m doing a simple DSGE model with discretionary policy. The code works but I don’t know if it works correctly or not because it gives me the same results as I change the parameters of my objective function or the sign of the function. Here is the code. Thank you so much

```auto
        var y_gap pi u g i ;

    varexo eps_u eps_g ;

    parameters beta lyamda phi rho_g rho_u gamma_pi ;

    beta=0.99;
    phi=1;
    rho_u = 0.7;
    rho_a = 0.8;
    lyamda=1.7;
    rho_g=0.8;
    gamma_pi=1.5;

    model(linear); 

    y_gap= -phi*(i-pi(+1))+y_gap(+1)+g;
    pi=lyamda*y_gap+beta*pi(+1)+u;
    g=rho_g*g(-1)+eps_g;
    u=rho_u*u(-1)+eps_u;
    end;

    shocks;
    var eps_u = 1.4;
    var eps_g=0;
    end;

    planner_objective (-1/2)*(0.5*(y_gap^2)+pi^2);
    discretionary_policy(instruments=(i),irf=20,planner_discount=beta,discretionary_tol=1e-12) y_gap pi u ;
    //set_param_value('rho_u',1.8);
    //discretionary_policy(instruments=(i),irf=20,discretionary_tol=1e-12) y_gap pi u;

```

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<div class="post-metadata">

**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [10 April 2021 09:46 UTC](https://forum.dynare.org/t/discretionary-policy-dsge/17846/2 "2021-04-10T09:46:51Z")

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What do you mean? If I increase the weight on `y_gap`, its IRF decreases.