Discretionary Policy in the Hybrid NKM - Preprocessing Error

Optimal Policy
1

Hi everybody,

I have successfully run the code for ramsey_policy, but with discretionary_policy (see attached file “versuchdisc.mod”), the program stops working giving me the following error message (I suspect an overkill due to a too severe or too many mistakes in the specification):

"This application has requested the Runtime to terminate it in an unusual way.
Please contact the application’s support team for more information.
Processing outputs …terminate called after throwing an instance of ‘SymbolTable::UnknownTypeSpecificIDException’

??? Error using ==> dynare at 114
DYNARE: preprocessing failed"

While most peculiarly, when using expectation-operators with one or two lags respectively (see attached file “Versuchsweise.mod”) it works out ok (nonetheless, this is not a solution since it doesn’t treat the actual model then).

Can anyone help me with this?
I would be most thankful!
Best, Kira
versuchsweise.mod (775 Bytes)
versuchdisc.mod (701 Bytes)

2

You have 5 variables, but only 4 equations.

3

It is normal to have less equations than variables when doing ramsey policy.

I can’t replicate the crash, both on GNU/Linux and Windows XP using Dynare 4.3.0. What version of Dynare are you using? Which operating system?

4

I was able to replicate this problem under Windows 7 x64, Matlab 2012a, Dynare 4.3.0. It seems to be some bug/problem in dynare_m.exe, which crashes for unknown reasons.

5

The reason is a bug in Dynare 4.3. It has been fixed in the snapshot from 29/09/12.

6

It is fixed in Dynare 4.3.1.

7

May I ask you how to choose the omitted equation when using discretionary_policy and how to choose instruments? Thank you very much.

8

Usually it follows from the problem setup. If you have a planner setting the interest rate, then obviously the interest rate is the instrument and the “omitted equation” is the policy rule for the interest rate.