Fiscal rule effects

Stochastic simulations
1

Hi all.

I have a simple model of a small open economy that replicates Colombia’s fiscal rule that consists of having a structural balance of 1%.
It is written in the following terms:

%32. Balance estructural objetivo
baesobj=baes/pib;

where
baesobj is target structural balance
baes is structural balance
pib is GDP

The problem I have is that the fiscal rule is having no effect with any objective goal, that is, if I set a goal of 5%, it gives me the same results as if I put 1% in all the variables. Mathematically I have reviewed the model and I cannot find the reason why the rule is not having effects.

I would appreciate if someone could help me or suggest something to do

Best regards

actualregla.mod (3.8 KB)

2

Which parameter do you vary? And what is the object you are looking at that does not change?

3

I am not changing parameters. The first thing I must clarify is that I am looking at the effects of the rule in the face of crashes. This should in practice show that when faced with different values ​​of the structural balance goal, before a shock, the oo_irf values ​​must vary? Or am I wrong?

before this
I am changing the value of baesobj which is the structural balance goal.
Not change any variable, neither GDP, nor debt, nor government spending, nor consumption, nor taxes, nothing changes by altering the goal values.

4

But how do select a different point in the state space to start with? After all, baseobj is not a state,

5

thank you very much. I understand that I am missing