Monetary policy rule

Hi, I’ve tested different Monetary policy reaction function for my model which include growth rate or deviations from the steady state, but still can not compute the steady state.
What do you think the problem is?
Sentiment2.mod (4.2 KB)
Sentiment2_steadystate.m (1.9 KB)

Hi, Can anyone help me?


log(mb/mbbar)=rhomb*log(mb(-1)/mbbar)+(1-rhomb)* (log(PIstar/PIbar)+LambdaPI*(log(PI/PIbar)-log(PIstar/PIbar))+Lambday*log(y/ybar))+nu;
implies that mb should have steady state mbbar. But you set mb=PI;. That cannot work unless the two are the same.

They are equal in steady state, but they are not the same in the original equation. I set equal the PIbar and mbbar values but the problem did not resolve. What is your suggestion for solving the problem?

That particular equation gives you the steady states of the variables involved in the equations. Are these steady state values (the ones with the bar) consistent with your steady state file?