Unless I specify the planner’s discount factor to be marginally above the private sector’s discount factor, I run into indeterminacy problems. To get a determinate solution, the planner’s discount factor only needs to be marginally different to the private sector one (e.g. 0.99001 vs. 0.99)
I have experienced this issue with different models.
Is there an explanation for such phenomenon?
Many thanks in advance,
Bianca
I’m running Ramsey policy with Dynare v4.3.0 and don’t have the problem you described. Your problem should be model-specific.