I am using the ramsey_policy command in Dynare. I was able to solve, find the tax that maximizes welfare, for an economy with one technology shock. However, I would like to understand why Dynare doesn’t solve the same problem when I model an economy without shocks? I get the following error:
Error using set_state_space (line 88)
Dynare currently does not allow to solve purely
static models in a stochastic context.
Error in stoch_simul (line 74)
Error in ramsey_policy (line 42)
info = stoch_simul(var_list);
Error in RamseyB (line 184)
Error in dynare (line 235)
Could someone please explain to me why this is not possible?