- It’s not that Welfare is wrongly simulated. The problem is that when using Ramsey in Dynare, you cannot enter a recursive definition of welfare in the mod-file as it will create a singularity. That’s why there is a separate function to evaluate the planner objective. For that reason,
simult_will not be helpful unless you use it to integrate out future shocks using simulations. My hunch is that this will be infeasible. - CMAES will not help. It’s not about your optimizer in the steady state file converging to something only locally optimal. It’s about Dynare’s routines internally converging to a local optimum. As of right now, there is no way to change this other than trying different initial conditions. But even with a global optimizer, that would be someone should do to make sure results are not driven by initial conditions.
- Yes, Taylor can dominate the lower bound of Ramsey results. One of the theoretical reasons can be that we do not check second order conditions. So you may end up approximating around a local minimum instead of a maximum. But there are no general results available for this. If you have multiplicity, quite often anything goes.
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