Is it possible to estimate a model under discretionary optimization?
While my model solves with discretionary_policy, when Dynare reaches the estimation command it returns a “dimension mismatch” error. The mismatch is for a single row, as in:
b(:,cols_b) = jacobia_(:,cols_j); in stochastic solver
I was wondering if Dynare is at all set up to do estimation after discretionary_policy.
I do not know if dynare can do that yet (I got the same problem a while ago and it was not possible). But at Norges Bank the model of the bank is estimated under optimal policy. They use a modified dynare version used also in the paper on loose commitment by De Bortoli, Nunes, Maih. Maybe you want to contact Junior to ask for code sharing.