Welfare comparison With lambda_utility

M_P91 · April 6, 2024, 2:43pm

Hi everyone,
I am trying to compare and Monetary policy , fiscal policy and environmental policy in an NK model using the standard consumption-equivalent measure. I found the mod file for Born and Pfeifer (2018) and have been working to replicate it. I have attached my files below. I get the following errors when I try to calculate lamda_utility using the solver:

Error using feval
Undefined function ‘get_consumption_equivalent_unconditional_welfare’ for input arguments of type ‘struct’.

Error in csolve (line 62)
f0=feval(FUN,x,varargin{:});

Error in ED.driver (line 1983)
lambda_unconditional_demand=csolve(‘get_consumption_equivalent_unconditional_welfare’,0,1e-8,1000,M_,oo_,options_)

Error in dynare (line 310)
evalin(‘base’,[fname ‘.driver’]);

I tried to search up on what these errors mean but it’s still not very clear to me. I have attached the updated mod file and m file. Could you please take another look and suggest on what I should try next? Thank you!
ED.mod (7.9 KB)
get_consumption_equivalent_conditional_welfare.m (2.7 KB)

eisamabodian · April 6, 2024, 8:55pm

get_consumption_equivalent_unconditional_welfare is a MATLAB function file and this name is an input in your \texttt{csolve } function.

I think that get_consumption_equivalent_unconditional_welfare may not be normal input parameter in csolve function as I know.

Although Professor Pfiefer may help better in this case.

stepan-a · April 7, 2024, 5:20am

Hi,

I don’t really understand what you try to achieve here, but clearly you are missing a file. You should download this one from @jpfeifer repository:

github.com

JohannesPfeifer/DSGE_mod/blob/master/Born_Pfeifer_2018/Welfare/get_consumption_equivalent_unconditional_welfare.m

function outvalue=get_consumption_equivalent_unconditional_welfare(par_value_lambda,M_,oo_,options_)
% outvalue=get_consumption_equivalent_unconditional_welfare(par_value_lambda,M_,oo_,options_)
% function outvalue=get_consumption_equivalent_unconditional_welfare(par_value)
% computes the unconditional welfare difference between the given model equilibrium and the 
% alternative with a consumption-equivalent of lambda lost compared to the
% natural/flex-price allocation; it relies on the unconditional mean of
% lifetime utility defined in the model and computed by Dynare

% Copyright (C) 2018-2023 Johannes Pfeifer and Benjamin Born
%
% This is free software: you can redistribute it and/or modify
% it under the terms of the GNU General Public License as published by
% the Free Software Foundation, either version 3 of the License, or
% (at your option) any later version.
%
% It is distributed in the hope that it will be useful,
% but WITHOUT ANY WARRANTY; without even the implied warranty of
% MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
% GNU General Public License for more details.
%

This file has been truncated. show original

Also there is a typo in the list of endogenous variables. Dynare is case sensitive, you have to replace Welfare_Gap (in your mod file) by Welfare_gap (which is expected by the matlab routine).

On my laptop the code is crashing because of the hundreds of generated plots (java error), I had to use the option nograph in stoch_simul.

Best,
Stéphane.

M_P91 · April 10, 2024, 10:35pm

Thank you Professor Stephen for your reply, the problem is solved