Stochastic/risky steady state using occbin

Occbin
1

Dear All,

I have a model in which the occasionally binding constraint is slack in the steady state. The model is too complex to be solved using global solutions. Can I combine a risky/stochastic steady state approach with the occbin package to circumvent the precautionary behavior issue in a log-linearized solution?

Thank you.

2

No, that is not feasible. You may want to check out DynareOBC, which may be suited for this.

3

Thank you for the quick reply, Professor Pfeifer. Unfortunately, I cannot run any example from the DynareOBC folder. Is it because we have to stick to Dynare 4.5 version?

Should I tag @cfp in this thread?

Thank you again.

4

Did you use the package from

?

5

Thank you for checking in. Yes, I used this dynareOBC release.
Best

6

Then what is the error message you are getting?

7

You can try the “firstorderaroundmean” or “firstorderaroundrss” options with DynareOBC. These should get you roughly what you want.

8

Thank you for the follow up. This is the error message:

Error using dynareOBCCore
Failed reading Dynare output. This is usually caused by an incorrect command line option.

Error in dynareOBCSetup (line 297)
dynareOBC_ = dynareOBCCore( InputFileName, basevarargin, dynareOBC_, @() EnforceRequirementsAndGeneratePath( Update, OriginalPath, CurrentFolder, dynareOBCPath, InputFileName, varargin{:} ) );

Error in dynareOBC (line 711)
dynareOBCSetup( OriginalPath, CurrentFolder, dynareOBCPath, InputFileName, varargin{:} );

I get this error by just typing “dynareOBC AB06.mod” in the AdamBilli2006’s folder.

Best

9

Thank you for following up. When I type “dynareOBC AB06.mod FirstOrderAroundMean” or “dynareOBC AB06.mod FirstOrderAroundRSS”, I get the following error message:

Error using dynareOBCCore
Failed reading Dynare output. This is usually caused by an incorrect command line option.

Error in dynareOBCSetup (line 297)
dynareOBC_ = dynareOBCCore( InputFileName, basevarargin, dynareOBC_, @() EnforceRequirementsAndGeneratePath( Update, OriginalPath, CurrentFolder, dynareOBCPath, InputFileName, varargin{:} ) );

Error in dynareOBC (line 711)
dynareOBCSetup( OriginalPath, CurrentFolder, dynareOBCPath, InputFileName, varargin{:} );

Best

10

Do you have order=2 or order=3 in your Mod file?

11

Thank you for following up. The order of approximation used doesn’t matter. The .mod file doesn’t run regardless of order=1, 2, or 3.

The error message is the same in all cases, as I described above.

Best

12

Please email me your MOD file to my personal email (see my website). (This is Tom Holden.)

13

Thank you for the quick reply. I have just sent you an email to your gmail account.

Best