I would like to include an occasionally binding constraint to my model of the form:
where dbar is at least equal to zero (or larger).
Is this feasible in dynare? If not, could you please give me some hint on where to look for to solve this problem!!
Many, many thanks in advance!
…and one more thing:
When I write the constraint in the model block, should I write:
mu*(d-dbar)=0, where mu is the lagrange multiplier assigned to the constraint?
This is only possible under perfect foresight, i.e. using simul. Search the forum for examples.
extended_path can also be used for that purpose.