Hi,
I’m working with a non-linear DSGE model that has two steady states. Depending on the initial values, the steady-state outcome changes. I need to differentiate between stable and unstable steady states for different parameter values and visualize them on a graph (similar to the attached example). Could anyone assist me with this?
You need to elaborate a bit more what you are trying to do and where the challenge is. Determinacy is usually a local property, not a global one. Do you want to alter the approximation point or how do you deal with nonlinearity?
Thank you for your response.
The issue is that in my code, there are two steady-state solutions. We need to select one of them. Naturally, one of the criteria is determining which solution is stable and which is unstable for different parameter values.
We have also solved the model nonlinearly. So it is possible to have stable and unstable steady states.
Thanks.
Is this a Dynare question? Here I wouldn’t know how to implement this. What do you mean with
?
And how did you solve the model nonlinearly?
