Dear Professor jpfeifer;
I am working on a real estate model recently. My model includes patient families, non-patient families, entrepreneurs, retailers, and bank intermediaries. I want to give a shock to the loan interest rate of non-patient households, so I need to delete the central bank and monetary policy equation. Is this feasible?
That’s impossible to tell in this generality. But I doubt that you will be correctly closing the model in this case. What will determine inflation? Or is this a real economy?