I’m a master student economics fooling around with dynare, trying out calibrated simulations.
I can get simulations running in a bondless capital / labour economy with little to no problems.
But as soon as I try to introduce bonds of some sort or another, I fail in doing so.
Monetary economics is not my strongest to say the least.
I think the problem must lie somewhere in the solvency condition for bonds or the interest rate rule.
This is the model I’m talking about:
- logaritmic utility in consumption and leisure (relative weight of leisure is gamma).
- Perfect competition on goods and labour market,
- no capital.
- time preference beta.
- fixed technology (which I will shock when the model works)
A = a; // technology = base value Y = A*L^(1-alpha); // production function Y = C; // goods market clearing W = P*A*(1-alpha)*L^(-alpha); // firms optimization 1 / C / P = gamma / (1-L) / W; // consumption leisure trade off 1 / C = 1 / C(+1) * (1+i(+1)) * beta; // consumption euler B = (1+i)*B(-1) + W*L - P*C; // consumer budget constraint i = (1/beta - 1) + phi * ((P(+1) - P) / P; // some sort of taylor rule
any help would be appreciated !