OccBin - inequality constraints in Galì (2016)

Dynare help (legacy posts)
1

Hello!!
I’m working on the new working paper by Galì "The Effects of a Money-Financed Fiscal Stimulus "(Dec 2016) and I have some difficulties/problems with the implementation of ZLB in dynare. ZLB is obtained with a demand shock. Galì replaces the money demand equation:

Moneydemand=consumption-eta*interest ]

With

(Interest-log(beta))(moneydemand – consumption +etainterest) = 0 ]

under two constraints:
1- interest >= log(beta)
2- moneydemand >= consumption – eta*interest

I’m using OccBin (call_solve_two_constraints) but I can’t understand how to set the constraints. I attach the wp and the basic mod.
I am a young student so If You could help me I would really appreciate it. I kindly request any advice or suggestion.

Thank you so much
gmoney_dec2016-1.pdf (399 KB)
newfiscalstimulusLT.mod (1.62 KB)

1 Like
2

Sorry, but at the current stage, occbin is an external package. I have not worked with it and have no experience using it. Thus, I am unable to provide support. Maybe other users can help you. Otherwise, you might need to contact its authors.

1 Like
3

Thank you so much, you have benn very kind. I hope in other users’ answers.

1 Like