Ramsey Policy No shocks

Optimal Policy
1

Hello!!

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)
oo_.dr=set_state_space(dr,M_,options_);

Error in ramsey_policy (line 42)
info = stoch_simul(var_list);

Error in RamseyB (line 184)
ramsey_policy(var_list_);

Error in dynare (line 235)
evalin(‘base’,fname) ;

Could someone please explain to me why this is not possible?

Thank you in advance.

Aleja

2

It’s a problem of Dynare programming. Some matrices would be empty if there is no forward-looking equations, crashing the program. But you can always get round this by using a dummy variable. See

3

Dear Professor jpfeifer:

Thank you for your reply! I added the variable and the equation but i get the following error:

Reference to
non-existent
field
‘exo_names’.

Error in
stoch_simul
(line 114)
labels =
deblank(M_.exo_names);

Error in
ramsey_policy
(line 42)
info =
stoch_simul(var_list);

Error in
RamseyB (line
196)
ramsey_policy(var_list_);

Error in
dynare (line
235)
evalin(‘base’,fname)
;

Best regards,

Alejandra

RB.mod (777 Bytes)

4

Please use the newest Dynare version. It will tell you

Error using stoch_simul (line 26)
stoch_simul:: does not support having no varexo in the model. As a workaround you could define a dummy exogenous variable.