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Stochastic simulations
1

one.zip (60.3 KB)

Hi all, :slight_smile:
First time here!

I am trying to study the effects of some fiscal policies on the New Keynesian model, based on Veronica Guerrieri’s paper Cao_et_al-2020-SSRN_Electronic_Journal.pdf (1.2 MB) (starting from page 33) for the analysis of Covid-19’s impact on the macroeconomic scenario.
I considered the simplest fiscal policy: a lump-sum transfer in the contect-intensive sector. However the results I obtained are quite weird, all near to 0 and a negative interest rate.

Could you please go through and trying to help me? Thank you so much.

2
  1. When I run the file, the steady state cannot be found. You did not provide any initial values.
  2. Why are there no forward-looking variables in your model?
3

Hi,

In the zip there should be also the function with the steady-state, so the code should actually work. Do you think I should enter also some numerical values in the .mod file?

For the second point I avoided the forward-looking variables since I experienced some Blanchard-Kahn conditions errors, with problems of indeterminancy.

4
  1. The steady state file is not a valid one, including its name. See the one in the Dynare examples folder. Also note that the steady state must be explicitly computed, not implicitly defined via equations containing expression the left. For example phi*a1= does not work.
  2. You cannot “avoid forward-looking variables”. They are part of the economic problem. There is a unique correct timing. If the BK conditions do not hold, there must be a mistake somewhere.
5

one.zip (60.3 KB)

  1. I changed the equations in the steady-state function as suggested, I have no problem related to the name of the file or its validity, so I don’t understand what is the issue here.

  2. I added again the forward-looking variable, but I cannot find out any mistake.

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Your file is named GLSW.mod, so any _steady_state file must be called GLSW_steadystate.m

7

Sorry for bother again, but changing the name I have the problem of “too many inputs arguments”. What should I do?

8

See Code not working after updating Dynare to 4.6.0
In your case, simply use a steady_state_model.-block instead. See e.g. examples/fs2000.mod · master · Dynare / dynare · GitLab