Hi there,
I’m trying to solve a perfect foresight model for a climate change transition path on some economic and environmental variables. The issue is that “standard” setup of perfect foresight (perfect_foresight_setup(periods=@{simulation_periods});
perfect_foresight_solver;)
does not work but, if I use the option “linear approximation” as perfect_foresight_setup(periods=@{simulation_periods});
perfect_foresight_solver(linear_approximation);
the model does indeed converge. I can’t explain myself why is this happening and if I can use the model solved in linear form anyways and, if so, how should I interpret the simulated paths of my variables (?).
I attach the code here in case someone can give me a hand on this.
Best,
J
sbonds_new.mod (12.3 KB)