Gertler&Karadi (2011) credit policy implementation

I’m relatively new to dynare, so I was hoping to get some help from this forum.
I’m currently implementing a countercyclical capital requirement into Gertler & Karadi (2011). I downloaded the mod file from the macro model database, but I can’t get the credit policy to run inside dynare.

EDIT: I’ve just tried running it using the Model Database procedure (in which you can select the model, shocks etc.)
The problem is that I HAVE to choose a monetary policy rule, and theirs is not on the list.
Eventually, I want to change some of the equations of the model, and see how the results are different between a situation WITH and WITHOUT the credit policy. Any suggestions?
Thanks in advance!


In Peter Keradi’s website you can find their original code.

Hope it helps


Thanks for your reply!
I also tried to work with their code. My problem is that ‘‘content’’ is there, but the .mod files are empty.
I do not understand how to run the code from the different files (which are .m files, like DSGE_SteadyState.m)
I guess I have to combine them somehow?

Have you looked into the replication folder of the MMB?

If I remember correctly, there is a folder
called “dynare” that contains the files that you need.

Otherwise there are several matlab function (mainly FA_func and FA_main) that should
create the dynare file that you need.

Thanks! I figured it out.
Indeed, the FA_Main file contains the elements to run it, I just hadn’t figured out that you should run it in matlab instead of dynare.

Good evening,

Unfortunately, it seems embarassingly difficult to find out any full derivation of the pricing block in Gertler and Karadi “A Model of Unconventional Monetary Policy” (2011). I am writing a model with a very similar pricing block as theirs, namely competitive wholesale sector - monopolistic retail sector, nonlinearised, i.e. with recursive auxiliary pricing variables, price dispersion and the like.
They appear to be very hard to find, since the monopolistic wholesale-competitive retail is far more common. I have implemented the Gertler and Karadi pricing block and it appears to work, yet I would like to look into the equations more in depth. I have tried to contact the authors, in vain, though.
Do you happen to know derivations for this kind of setup?

No, unfortunately I am not aware of anything like this.

Thanks anyway! I will keep searching :slightly_smiling_face:

Hi @cmarch, I am currently trying to make sense of the pricing conditions (model/code) of the same Gertler Karadi (2011) framework for the wholesale sector (i.e. retail output). Can you guide me into a certain direction to derive the necessary pricing conditions? I have a feeling I might have write a separate post, but this would already help me massively. Thanks!

Hi Robert,

I suggest you have a look at Appendix B here

Jaqi_Li_Banking_DSGE.pdf (693.9 KB)

It arguably contains the most detailed step-by-step derivation.

Thanks Camilo, I will give it a go! At the moment I am a bit lost, where all the conditions come from. Hopefully, the document you sent me will clear things up. Thanks.