Gerali et al. (2010) "Credit and Banking"

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.

Thank you!

Hello again, meanwhile I understood part of my question. The only problem that remains is how to fix the collateral at its steady state value. Should be pretty easy as it concerns only the borrowing constraint but I still don’t know what to do. Thanks!

I don’t know the model, but it seems that collateral turns from a variable to a parameter fixed at the steady state value of the previous version of the model.