Replication of a paper


I am an undergraduate studying economics and trying to understand a more complex new keynesian model as it is given by Ravenna & Walsh, “Welfare Based Optimal Monetary Policy with Unemployment and Sticky Prices: A Linear-Quadratic Framework” (2010).

Since I do not have any experience in either replication of a model or the use of dynare I am not capable of rewritting their given complex dynare mod-files into simplier ones, which I can work with.

I attached a text file containing my code so far.
I have a slight idea of what I might have done wrong: I think the way I arranged the model is wrong, since not all variables are defined properly.

The mod.files as well as the paper can be found here:

It would be a big help if you could give me some crucial hint or name literature which might help.

Thank you in advance.
modfile.txt (9.07 KB)

What do you mean? Their mod-file is rather small and straightforward. Generally, I cannot recommend undergraduates working with complex New Keynesian models. Usually, they do not have the necessary training to succeed and only recognize this when it is too late and the thesis deadline is approaching.

A general source you might want to look at is Fernandez-Villaverde/Rubio-Ramirez 2006: “A Baseline DSGE Model”.
The problem in your current file is that the parameter definitions are not recursive. Sequentially execute the calibration in Matlab with F9. You will see that you use v_ss in the definition of theta before it is defined.