Hello! I am simulating the Gerali et al. model. I was able to start from the baseline model (=the full model) and change it step by step until the “FF (financial frictions) model”. Now I don’t know what to do to get the "QNK (quasi-new-keynesian model). The authors say:
- remove asset and debt deflation channels
Therefore the value of collateral is fixed at the steady state value and loans and deposits are repaid in real terms…
Can someone tell me what to do or post the code? I guess the budget and borrowing constraints of households and entrepreneurs have to be changed but I don’t know how.