I am a beginner on Dynare and I hope this question does not sound too trivial. I am trying to simulate an unanticipated and permanent reduction in the inflation target of the central bank in a closed economy model.
Among the various variables I have pai, which represents the level of inflation and among the parameters paiss which indicates inflation at steady state.
What I would like to do is to simulate the model and see the IRFs of the different variables, in case paiss goes from say 4% to 1%. Unfortunately, I don’t really know how to proceed. In the mod file I received, the value of paiss is first set at a certain value, in the initval section pai=paiss is placed and then the model is shocked. Now I would like to modify this model to simulate the above described scenario.
I thank everyone for the help