Ramsey Policy Error

Dynare help (legacy posts)
1

Getting the following error

[code]Configuring Dynare …
[mex] Generalized QZ.
[mex] Sylvester equation solution.
[mex] Kronecker products.
[mex] Sparse kronecker products.
[mex] Local state space iteration (second order).
[mex] Bytecode evaluation.
[mex] k-order perturbation solver.
[mex] k-order solution simulation.
[mex] Quasi Monte-Carlo sequence (Sobol).
[mex] Markov Switching SBVAR.

Starting Dynare (version 4.4.0).
Starting preprocessing of the model file …
Ramsey Problem: added 14 Multipliers.
Found 14 equation(s).
Found 29 FOC equation(s) for Ramsey Problem.
Evaluating expressions…done
Computing static model derivatives:

  • order 1
    Computing dynamic model derivatives:
  • order 1
  • order 2
    Computing static model derivatives:
  • order 1

??? Error using ==> dynare at 156
DYNARE: preprocessing failed[/code]

any ideas whats going wrong ?
I dont only get that error but also Dynare crashes, stating “dynare_m.exe does not work anymore”

2

Try to look at row 156, or share the code.

3

Also, use Dynare 4.4.2

4

[quote=“lah89”]
I dont only get that error but also Dynare crashes, stating “dynare_m.exe does not work anymore”[/quote]

Now that you mention it…
Thank you very much !

5

I dont wanna open a new topic for this questions althought it is not related to the error above (however it is related to Ramsey optimal policy):

Is there a way to constraint the instrument used for the optimal policy exercise to be positive?
I am trying to replicate a paper’s IRFs (which works quite well for the basecase) but so far not for the optimal policy part.

One source for the differences might be that Dynare suggests a path for the instrument that involves negative values (althought this does not make sense from an economic point of view). How can I prevent that ? (or cant I since I am in a stochastic model and I cant use e.g. a max{}-operator due to local approximations ?)

Thanks!

6

You could put the instrument in exp() in the model. Up to first order, it will be constrained to be positive that way.

7

thanks! problem is that the instrument has steady state 0 in the base case by construction (and only becomes positive under an optimal policy)
hmm

8

any other ideas?

(btw:
-since I used exp() in my model in order to loglinearize, I enter the variables as well with exp() into the objective function, no?
-including an endogenous variable that is following an AR(1) which innovation is getting shocked into the planner’s objective should not be an issue, should it?)

9
  • If the planner cares about absolute deviations instead of log-deviations/percentage deviations, then the planner objective must contain exp()
  • That should not be an issue.

I must say that I find it strange to have a planner using an instrument that can always go in only one direction. What is the economic intuition?