ZLB in Perfect Foresight Simulations


I have a model with UMP that features ZLB occbin along perfect foresight simulations. I use the max operator in the newest Dynare version and it works well. What’s the difference with respect to LMMCP?

Also, if my understanding is correct: OCCBIN command is for stochastic simulations right? It’s not for a PF simulations.


lmmcp is a specialized solver that sometimes performs better than the standard perfect foresight solver in the presence of max and min operators.

OccBin allows doing stochastic simulations. However, the solution is piecewise linear and therefore certainty equivalent.