Perfect foresight simulation failed

Perfect foresight simulations
5

Hi Johannes,

  1. Yes.
  2. Yes. I tried playing around with both the size and persistence of the shock.

But I resolved the issue just now - Apparently, the correct way to specify the target rule in dynare is:

[mcp 'i>-0.0030']
$0 = \phi \pi + y;$

instead of

[mcp 'i>-0.0030']
$\phi \pi + y = 0;$

I don’t understand why it makes a difference. Any idea? Just so I can avoid these silly mistakes in the future.

And, thank you for your help!

Best,
Vaishali