Fix Endogenous Variables for Anticipated MonPol Shock Scenario

Hi All,

I have a simple question. I would like to construct a scenario in which the central bank announces today that it will cut the policy rate by 25basis points in 4 quarters, until then the policy rate does not move, afterwards, the cut gradually unwinds.

I have set up a simple NK model and implemented the anticipated monetary policy shock sequence via the perfect_foresight_setup / perfect_foresight_solver commands. By playing around with the shock sequence, i could also more or less engineer the path for the interest rate which i wanted.

However, I was wondering if there is a proper way to do that: to feed in my desired path for the interest rate (e.g. path=[0,0,0,-25]) and let dynare search for the required exo variables (monetary policy shocks in my case) that implement this scenario. At the moment i’m doing it the other way around.

Does anyone have an example code or a reference for this?

Thank you very much and kind regards
simpleNK_FG.mod (4.3 KB)

I just added an example at DSGE_mod/NK_linear_forward_guidance at master · JohannesPfeifer/DSGE_mod · GitHub

Thank you!