Problem Drawing Determinacy Region

Stochastic simulations
1

Hello. I want to draw determinacy region using a DSGE model. The relevant parameters are ‘phipi’ (Taylor rule sensitivity to inflation), ‘psib’ (Tax rule sensitivity to debt overhang), and ‘phiy’ (Taylor rule sensitivity to output growth).

I want to plot determinacy region where x-axis is ‘phipi’(from 0 to 3), y-axis is ‘psib’(from -0.1 to 0.1) under each given values of ‘phiy’. I plan to draw this determinacy region for 5 different ‘phiy’ values = [0, 0.5, 1, 1.5, 2].

I tried to follow ‘Ascari_Sbordone_2014.mod’ Figure 11 replication by Prof. Pfeifer but I ran a problem with a message :

Error using resol
Too many input arguments.

Error in aob_policy_regime.driver (line 613)
[dr,info]=resol(0,M_,options_,oo_.dr, oo_.steady_state, oo_.exo_steady_state, oo_.exo_det_steady_state);

Error in dynare (line 278)
evalin(‘base’,[fname ‘.driver’]);

Error in aob_policy_regime (line 2)
dynare aob_policy_regime.mod

;
I would really appreciate your comments. Thank you so much!

Best Regards,
Yoonhyok

aob_policy_regime.mod (13.0 KB)
aob_policy_regime_steadystate.m (6.5 KB)
solve_calibration.m (531 Bytes)

1 Like
2

Please use Dynare 6.1 with
aob_policy_regime_steadystate.m (6.5 KB)
solve_calibration.m (531 Bytes)
aob_policy_regime.mod (13.1 KB)

3

Thank you so much! Now it works. There is one final question with respect to this. In the code, there is

Z_plot(info_mat==0)=1

I wonder if this means “if there is indeterminacy(info_mat==0), then Z_plot is 1, which implies that the white area is determinacy and the dark area is indeterminacy.”

Thank you always!

Regards,
Yoonhyok Choi

AOB determinacy region
AOB determinacy region700×525 4.33 KB

4 
Z_plot(info_mat==0)=1

sets the determinacy/stability area to 1, all areas that violate the BK conditions to 0. The subsequent

        contourf(phipi_mat,psib_mat,Z_plot,1)

defines a contour line at 1. So white should indeed by the determinacy/stability region.

5

I now understand this. Thank you so much!