Problem with Blanchard Khan / timing

[jpfeifer]

We had this same discussion already at

Interpretation of Ramsey Steady State

What you provided is the steady state of the private sector equilibrium conditions, conditional on the value of the instrument. But that is not yet the steady state of the Ramsey problem. Typically, a steady state of that problem requires finding a value of the instrument that induces a steady state of both the private sector FOCs and the equilibrium conditions of the Ramsey planner. Take the labor subsidy in the New Keynesian model with monopolistic competition. Any value of the subsidy is cons…