Dear,

I am writing a code for Optimal monetary Policy paper, BUT I am meeting a problem as the below:

“planner_objective(Xt+am*mt-an*exp(Nt)+thestart+(muutilt-thestart)*exp(F1t)-(exp(sigtilt)/(2*pipi)^(1/2))*exp(-(thestart-muutilt)^2/(2*exp(sigtilt)^2)));

ramsey_policy(planner_discount=1.0045, graph, irf=20, periods=1000, instruments=(Rt));”

Why default planner_discount is 1.0 in ramsey_policy OPTION?

What’s the meaning of “planner_discount”? Is it the time discount factor, such as 0.995,0.99, etc.?

- If I set planner_discount=1.0, the code CANNOT work:

“??? Error using ==> print_info at 45

Blanchard Kahn conditions are not satisfied: indeterminacy”. - If I set planner_discount=1.0045, the code can work:

"Approximated value of planner objective function- with initial Lagrange multipliers set to 0: 172.3171
- with initial Lagrange multipliers set to steady state: -277.9055".

- If I set planner_discount=0.999, or 0.994, or 0.996, the code CANNOT work:

“??? Error using ==> print_info at 42

Blanchard Kahn conditions are not satisfied: no stable

equilibrium”. - If I set planner_discount=0.995, the code CANNOT work:

“??? Error using ==> print_info at 54

One of the eigenvalues is close to 0/0 (the absolute value

of numerator and denominator is smaller than 1e-006!

If you believe that the model has a unique solution you

can try to reduce the value of qz_zero_threshold.”

the attaches are my codes, for your ref.:Benchcapifliendom.mod (13.4 KB)Funccapifliendom.m (684 Bytes)

Funccapifliendomini.m (1.3 KB)

RunBenchcapifliendomIRF.m (7.5 KB)

Thanks!

Jianfeng Liu