Attached is a calibrated dsge model which has been solved for steady states. I want to estimate optimal monetary and macroprudential policy a la Quint and Rabanal - Monetary and Macroprudential Policy in an estimated model of euro area (2013) where as they explain they optimize over the coefficients of the estimated taylor rule and then further extend it. How do I achieve this in dynare? I am under the impression that I just have to add the following
or if I use optimal simple rule I will have to switch off the taylor rule expression in my model and rewrite the general rule with coefficients over which it is to be estimated.
Or do i need to estimate the whole model again but now by defining the objective function as a welfare criterion with weights on different agents in the model (it is a heterogenous agent model)
What would be a simple way to approach this issue.
utility_opt_10.mod (8.86 KB)