Dear all,

Thank you for help in advance! I really appreciate it.

I’d like to use ramsey function to solve for an optimal transition path from one steady state to another. Specifically, I use the RBC model provided by dynare, ‘ramst.mod’, extended to allow for a tax parameter “x”. The after-tax production function is ‘aa*x*k(-1)^alph’. I also assume there is a quadratic tax adjustment cost: ‘psi*(x-x(-1))^2’.

I want to solve for an optimal path for x from x=0.8 to 0.9. This requires x should not be higher than 0.9. This policy constraint is imposed by assuming a very large resource cost if x>0.9: ‘(x>0.9)*10000’.

However, when I use ‘ramsey’ to solve for the problem. Dynare gives the error:

[code]Reference to non-existent field ‘maximum_exo_lag’.

Error in check_model (line 22)

xlen = M_.maximum_exo_lag+M_.maximum_exo_lead + 1;

Error in stoch_simul (line 63)

check_model;

Error in ramsey_policy (line 25)

info = stoch_simul(var_list);

Error in ramsey_transition (line 121)

ramsey_policy(var_list_);

Error in dynare (line 120)

evalin(‘base’,fname) ;[/code]

I attached the codes. can any one please take a look and let me know if anything goes wrong.

Thank you for your time in advance.

ramsey_transition.mod (1.88 KB)