I am trying to find the optimal variables of monetary policy that maximize welfare. I have taken codes (i.e., commands at the end of mod file after stoch_simul, and welfare_objective.m) from the forum. They work with some other mod files provided in different topics in this forum. However, when I r…

In Dynare 5.1, you need to use welfare_objective.m (1.1 KB) The problem was the missing setting of qz_criterium.

Thank you, professor. It works fine now. However, whenever I change the initial values in x_start, I get different optimized parameters (i.e., in x_opt_hat). Moreover, when I set the same initial value for the parameters, I always get the same optimized values for the parameters. Does this imply a…

Does the code even work for your model? When I ran it, it always triggered an error code. Does a simulated version of the model work?

Yes, it is working. When I ran it with Dynare 4.6.4, it didn’t work. I installed Dynare 5.1 and then I got the results without the error.

But the value of the objective function was the 1e6 that indicates a problem in the model.

I cannot understand which variable indicates the value of the objective function equal to 1e6. I have tried the same code with a simpler mod file. The simulated version works without any error; however, I still face the same values for optimized parameters. I still get the same results even when I …

Your starting value is invalid. Try x_start=[1.5, 0.25]';

Thank you. It is working with these starting values-just one more questions: I get a very large value for the parameter responding to inflation in the monetary rule, e.g., 500 or so. Does it make any sense theoretically?

Dear Professor, Thank you again. I have some follow-up questions regarding conditional and unconditional welfare. As far as I know and have read throughout the forum, unconditional welfare is the mean of a simulated series of welfare. Is this right? Second, is the welfare maximized by welfare_obje…

Dynare Forum

Optimal policy error

Optimal Policy

jpfeifer 18 May 2022 10:43 10

Have a look at

Problem with results of welfare analysis Stochastic simulations

FYI: https://www.nber.org/papers/w12402 and for example, your searching space is located in the following flattened surface: [FaiaMonacelli2007fig3]

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