A couple of clarifications to ask on ramsey_policy/ramsey_model commands in Dynare 4.5.
In the online manual, it is stated that only 1st order approximation of the Ramsey set of FOCs is available with ramsey_policy. However, when setting ‘order=2’ as option, Dynare seems to run. Just wondering if it produces a 2nd order approximation this way.
If that is not the case, would it work using the sequence ramsey_model and stoch_simul (order=2)? With the first command producing the non linear Ramsey FOCs and the second performing the 2nd order approximation over the the so produced set of Ramsey conditions?
I noticed that the indication of the planner instrument(s) is only optional. I was therefore wondering what the ramsey_policy does when no instrument is indicated? Is the ramsey_policy In such case just choosing the decentralised economy equilibrium, therefore returning the same results as stoch_simul?
I notice lead/lag variables are not accepted in the Planner objective function. This may be a limitation when Household utility contains habits and we want Planner objective to be same as household. To work this around I just defined a new variable, say Fake_t=C_t-1, and then inserted Fake_t in the objective in place of C_t-1. That seems to work. Do you anticipate an issue with this solution?