Dear,
I try to do a robustness check when estimating Taylor rule with a reaction to 1)current inflation, 2)expected inflation. Therefore, the Taylor in Dynare code look
1)Rhat = (1-rR)rqqinf + (1-rR)rpipihat+ry*(1-rR)Yhat+rRRhat(-1)+eRhat; for current inflation
2)Rhat = (1-rR)rqqinf + (1-rR)rpipihat(+1)+ry*(1-rR)Yhat+rRRhat(-1)+eRhat; for expected inflation
Although I get estimated the model with a reaction to current inflation, I get an error when estimating the model with a reaction to expected inflation. Could you help me on this, please?
I enclose my Dynare code and data used for the estimation.
Many many thanks in advance,
M
data_new.m (3.49 KB)
A_new.mod (4.29 KB)