I am in trouble with how to deal with occasionally constraint.
If I think about ZLB and following max function, I understant that I need to use “lmmcp” option and “mcp” to bind the interest rate as non-negative.
However, if I want to think about max function such like following with U,U_p,U_t are all determined as endogenously, I am not sure how to define in dynare code.
If there is shock, we do not know how U_p and U_t will move. I think I cannot bind them by “mcp” because I am not sure which variable will be larger after shock comes.
Like that, if I want to define max function whose both of elements are determined as endogenously, how to deal with this??
Is using “expanded_path” command only way to come over this issue??
I thought following slide p.41 may be the answer to this, but I cannot find original code of this. The latest version of this slide seems to use “mcp” option instead.
It would be much appreciated if you could give me some hints about this.