Hello,
I would like to ask how I can implement a one time switch in policy. Say, I have a peg for the short-term interest rate from periods 0 to 20. Then at time T=20 and on, I would like to switch to a non-peg regime. Think of the simplest way to model a peg. I have a taylor rule with a response to inflation equal to 0 (i.e parameter on inflation stabilization is 0). Then, at T=20, I want that parameter to switch to say 1.5. Can I implement this in dynare?
Also, from what I have read, Dynare does not support Markov switching processes in DSGE model yet. Is that available for the unstable version and is there a new stable version that supports Markov chains for DSGE models in Dynare.
Thank you