# Nominal rigidity in perfect foresight simulation

**URL:** <https://forum.dynare.org/t/nominal-rigidity-in-perfect-foresight-simulation/25907>\
**Category:** Perfect foresight simulations\
**Created:** [12 June 2024 14:57 UTC](https://forum.dynare.org/t/nominal-rigidity-in-perfect-foresight-simulation/25907 "2024-06-12T14:57:51Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![Random.t](https://forum.dynare.org/letter_avatar_proxy/v4/letter/r/eada6e/32.png) [@Random.t](https://forum.dynare.org/u/Random.t)\
**Post date:** [12 June 2024 14:57 UTC](https://forum.dynare.org/t/nominal-rigidity-in-perfect-foresight-simulation/25907/1 "2024-06-12T14:57:51Z")

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Hi everybody,  
I have a doubt; when running perfect foresight simulation to assess how the model economy switches from one steady state to another, does it make sense to have in the non linear model block equations related to nominal rigidities such as NKPC (ie. non linear FOC of the price setting firm), Taylor rule and some other expressions for prices?  
Long run money neutrality is a sufficient argument to get rid of nominal variables? In such a case, for instance, how can I manage the non linear Euler equation, where R appear, if Taylor rule is annhilated?

Thank you so much

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [13 June 2024 05:53 UTC](https://forum.dynare.org/t/nominal-rigidity-in-perfect-foresight-simulation/25907/2 "2024-06-13T05:53:24Z")

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Nominal rigidities will not matter in the long-run. But they will influence the short-run transition behavior between the steady states. For that reason, you generally cannot eliminate them.