Hi,
As far as I understand OSR basically computes the values for the parameteres that make a function of interest minimum. When I read the papers, they generally do a grid search. Is it the same thing with OSR?. If not, how can do a grid reseach for the parameters in the Taylor rule given a loss function, and why the values are different based on the nature of shocks? Best regards,
I am not sure I understand the second part of the question. OSR boils down to finding a minimum. That can be done in various ways. Grid search is one way of finding such a minimum. It is usually quite inefficient, but robust. OSR in Dynare uses a mimimizer instead of a grid search, because it is more efficient.
Thank you for the answer. Is there any example of the codes to conduct a grid search over the parameters in the Taylor rule? I know how to do OSR, but I didn’t understand how those parameters change depending on the shock. For example, I see papers which have different optimal parameters for different types of shock. This is what I meant in the second part of the question.
The papers in question only turn on one shock at a time and then run OSR. There is nothing special here.