Good morning everyone,
I am currently trying to simulate a Ramsey planner problem of my model. I want the planner to have control over two fiscal instruments at the same time, but the model does not work, as Dynare returns me this error:
Ramsey: The solution to the static first order conditions for optimal policy could not be found. Either the model doesn’t have a steady
state, there are an infinity of steady states, or the guess values are too far from the solution
I had a previous version of the model, with lump-sum taxes and the planner having control over only one instrument. In this case, the model worked well.
What I changed, in shynthesis:
- Distortionary taxation (so now there is a gov budget constraint)
- The planner now controls 2 instrument.
After this modifications, the model no longer works… Can you help me detecting the problem, please?
Thank you very much, have a nice day!
tempp.mod (5.2 KB)