I use the comand ‘osr’ to compute the optimal simple monetary policy. But I must set an initial value for the reaction coefficients. The results are always close to initial values. So could anyone can help tell me how to choose the initial values of the reaction coefficients. In fact, I tried to regress the policy function, but the sign is negative to intuition. Is there the other method, please?
If you are always close to the initial values, there are numerical problems. You should try a different
opt_algo. Try 9.
Dear professor jpfeifer, thank you for your quick response. It helps me greatly.