The IF-statement within external function in dynare 4.2.5

Dear all,

I am simulating a structural model using dynare for interest rate commitment on Taylor rule.

First, I have menaged to simulate the model perfectly with a standard Taylor rule, but I couldn’t do it by addding a commitment to it.

the standard taylor rule in my model is :

ibase=phi_iibase(-1)+(1-phi_i)(r+pistr+phi_xx+phi_pi(pi-pistr))

and I want to formulate is as

taylor rule: i = ibase if pi ≥ 0
i = O if pi < 0

for my zero rate commitment analysis

But I couldn’t do it in dynare. It would be very helpful for my analysis if someone can offer me a solution for my problem.

Many thanks in advance.

Regards,

Berk BILICI

Dear all,

You can find attached the mod file which I have used for the simulation of the structural model.

Thank you in advance.

Berk BILICI
bbtaylorrule.mod (1.71 KB)

Are you sure your model can be solved with perturbation techniques? Doesn’t the type of rule you propose introduce a kink to the policy function?

Dear jpfeifer,

I am trying to reproduce the results of the model used in a paper.

And in the paper it is indicated by the authors that they have used a stacked-time algortim of Hollinger (1996) for solving the model.

Actually I have done the simulation with the baseline taylor rule and the results are almost the same as in the paper, but my problem is to add zero interest rate commitment to the model for a second time simulation.

Thank you for your reply.