Dear Professor Pfeifer,
I mean to analyze the welfare loss under different policies and search for the opitmal policy. I set welfare loss function as in Monetary and macroprudential policies.pdf (823.3 KB)
by Angelini et. al.(2012). However, I don’t understand why the value of output gap and inflation in oo_.var is so small, and also these components in welfare loss function are not in the same order of magnitude. Is there anything I missed in the code? Would you please take a look?(The code is sent through message)
And also, the running of code for searching optimal parameters lasts very long time. Is there any way to shorten the time? e.g. loosen the accuracy of parameter or sth?
Thank you for your time.