Two m files and two mod files

Optimal Policy
7

Hello littlemacro,

I do not answer the question. I’m a beginner as well :grin:
Allow me to leave some messages here. Hope they are helpful.

First, this BK violation means there exists at least one error in your model.
One strategy is to go backward. Simplify your model until the new one can actually work.
However, as you said, if in Ramsey scenario, removing the equation of
Welf_t = U_t+\beta Welf_{t+1}
(and its variable, steady state claims,) it will work.
So the current version of code has already been a Minimal Working Example (MWE) :rofl:

Second, recently I’m reading the code below

Let’s focus on a few parts:
line 423-426

@#if Ramsey_policy==0    
    [name='Recursive Welfare']
    Recursive_Welfare=Utility+betta*Recursive_Welfare(+1);
@#endif

line548-550

@#if Ramsey_policy==0    
    Recursive_Welfare=1/(1-betta)*Utility;
@#endif

line578-584

@#if Ramsey_policy==1
    planner_objective Utility;
    ramsey_model(instruments=(R),planner_discount=betta);
    initval;
    R=1/betta;
end;
@#endif

They give me the impression that the Ramsey case does not couple with the welfare equation:
Welf_t = U_t+\beta Welf_{t+1}??
But I really saw some optimal Ramsey papers contain it, at least when they apply Levin’s package.

I also notice a post below:

The author calculates the recursive conditional welfare only in the Taylor rule, while keeping it absent in the Ramsey policy.

Regards

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