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