Government bond

General DSGE Modeling
1

Hello everyone.

I have used government bonds in the household and commercial bank sectors of my DSGE model. Is it necessary to set government bonds to zero in the steady state? This action will result in the elimination of one of my equations

2
  1. No, that is not necessary. There can be debt that is not in zero net supply.
  2. Note that having debt in zero net supply not only eliminates an equation, it also eliminates a variable.
1 Like
3

Thank you for your response.