Rerun OSR to check for optimality or local extremum

[jpfeifer]

1. You are not running a proper loop. Please have a look at

Policy frontier

Starting with the unstable version of 12/18/2016 (Dynare 4.5), the following code should work for your mod-file % make loop silent options_.nofunctions=1; options_.nocorr=1; options_.noprint=1; options_.irf=0; options_.silent_optimizer=1; options_.osr.opt_algo=9; % find position of variables in variable_weights y_pos=strmatch('y_hat',M_.endo_names,'exact'); pi_pos=strmatch('pi_hat',M_.endo_names,'exact'); % find position of variables in var_list_ y_pos_var_list_=strmatch('y_hat',var_list_,'e…

and use set_param_value to update your parameter a.
2. It is not uncommon that the optimal parameters are extremely large. See

Optimal simple rule

What do you mean with Dynare is unable to find a solution When I run the code with the unstable version, I get which is a solution It is not unheard of that optimal parameters may be infinity (essentially full stabilization). In those cases, people often restrict the parameter range. In the unstable version, you can use osr_param_bounds; phiP, -1, 1; end; What do you mean with You want a welfare function that is maximized using that parameter?

3. Within your loop you can add another loop that draws random starting values.