Simulate alternative paths of nominal interest rates


I would like to compute some simulations where I consider alternative paths of the short term nominal interest rate relative to what was actually done in the data. I am working with a simple 3 equation New Keynesian model. I can work with the state space representation of the model (given the matrices dr.ghx and dr.ghu). The issue is that the nominal interest rate is not part of the state equation since it can be represented as a function of the state variables. I am wondering if there is a simple way to force Dynare to include a redundant or static variable in the state vector so that I could simply input alternative interest rates and iterate the transition equation for the simulation.

Any other recommendations for how to approach this are appreciated.


You need to think this through conceptionally. If your model includes a Taylor rule, how can you select the interest rate? Generally, the rule and the values you want will conflict, unless you have a monetary policy shock causing the particular value. That would be something conditional forecasting does.