Problem with simul in deterministic model

Dear Professor Pfeifer,

(1) I set up a deterministic DSGE model and want to see the trajectory of endogenous variables (e.g. output) after adding of a new tax. I add this new tax variable into the model as a permanent shock, but the result says “Failed to solve perfect foresight model”. How should I improve this ?

(2) If I add this permanent deterministic shock into the stochastic model by using varexo_det and also mean to see the trajectory of endogenous variables, do I get same results of trajectory plot as in (1) or different ?

Thank you for your time.
Best regards

  1. Without seeing the file it is impossible to tell.
  2. Generally, no, because stoch_simul performs an approximation to the model, while perfect foresight solvers solve the fully nonlinear model.