Realized policy in optimal policy frontier

Optimal Policy
1

Hello everyone,

I am a new to both MatLab and Dynare. For a research project, after estimating a small open economy DSGE model, I am doing an optimal monetary policy exercise where I trace out an efficient policy frontier for output and inflation variation. After searching this forum I was able to find some code provided and was able to construct and plot the frontier on a graph. However, I am not sure how to also plot on the graph the output and inflation variation that results from the actual realized policy performance of the central bank from the estimated Taylor rule in the model. This is so I can compare the performance of the realized policy to the frontier to evaluate the performance of the central bank, as for example is done in Iacoviello(2005).

I have uploaded my mod file. Any help would be much appreciated!
soedsge_optimal.mod (3.4 KB)

2

That seems to be a question about the graph layout. How do you want the graph to look like?

3

I have linked an example picture(from Iacoviello,2005), right now with my mod file I am able to plot the frontier for policy but it is not able to plot the triangle. I am wondering how to plot also the triangle on the graph which stands for realized policy.

opt_frontier (2)
opt_frontier (2)1012×568 51.5 KB

4

Simply do

plot(var_y,var_pi,'+')