Simple ramsey policy


#1

Dear all
Can anyone help me?
I am trying to run simple mod file to get ramsey policy rule, under only sticky price NK model.
Whenever I run the mod file, though, I get the error code: You cannot include exogenous variables in the planner objective. I can not see what this means. I attach my files.
Another question is that as far as I understand, when I run ramsey_policy, steady and check block are not required. Is thic correct?
I appreciate in advance for your kind reply.

NK_RP.mod (1.6 KB)
param_NK_RP.m (158 Bytes)


#2
  1. Dynare is case-sensitive. You are using ln(C)' but it must beln©’. @sebastien I think this error message is a bug.
  2. Yes, those two command are not required (they never are, independent of Ramsey)

#3

To be more precise, in Dynare, variable names are case-sensitive, but keywords are case-insensitive.

I admit this message is a bit confusing. Since C (in capital) is unknown to the preprocessor at this point, it is automatically considered as an exogenous variable (with the new on-the-fly type declarations mechanism). Hence the error message.

I don’t really know how to improve the situation without going against the on-the-fly type declaration mechanism.


#4

Hi Sebastien,

Does it make any sense that my model (an open ec. model for 2 countries) is working (including BK Conds) with simple rules but the solution generated by the following lines doesn’t satisfy the Blanchard Kahn conditions:

%// Objective function and discount factor
planner_objective Util1 + Util2 ;
ramsey_model(instruments=(tau1,tau2), planner_discount=beta );

I must mention that if I only use Util1 it works. It’s the joint utility maximization the one that holds 1 eigenvalue>1 more than the number of variables.

Thanks

JC