clear clc set(0,'DefaultLineLineWidth',2) %--------------------------------------------------------------------- % To compute multipliers at ZLB, solve two models % simulation 1 is baseline that takes us at the ZLB % simulation 2 is baseline simulation that takes us at the ZLB plus G shock %--------------------------------------------------------------------- nperiods=30; maxiter=20; % Pick color of charts solution=1; irfshock = char('eps_ut', 'eps_taun'); %0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 baseline1=[ 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0]'; scenario1=[ -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 0 0 0 0 0 0 0 0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0]'; global M_ oo_ modnam = 'NKDMP'; modnamstar = 'NKDMP_ZLB'; constraint = 'r< -(1/beta-1)'; constraint_relax ='r>-(1/beta-1)'; %constraint = 'r<(1-1/beta)'; %constraint_relax ='rnot>(1-1/beta)'; % First time we solve simulation only with baseline shocks [zdatabaseline_lin1 zdatabaseline_pie1 zdatass oobase_ Mbase_] = ... solve_one_constraint(modnam,modnamstar,... constraint, constraint_relax,... baseline1,irfshock,nperiods,maxiter); % Second time we solve simulation with baseline shocks and scenario [zdatascenario_lin1 zdatascenario_pie1 zdatass oobase_ Mbase_ ] = ... solve_one_constraint(modnam,modnamstar,... constraint, constraint_relax,... baseline1+scenario1,irfshock,nperiods,maxiter); % Pick color of charts simulation=2; irfshock = char('eps_ut', 'eps_taun'); baseline2=[ 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0]'; % 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 ]'; scenario2=[ 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0]'; % 0 0 0 0 0 0 0 0 0 0 0 0 0.00 0.00 0.00 0.00 0 0.0 0 0 ]'; % First time we solve simulation only with baseline shocks [zdatabaseline_lin2 zdatabaseline_pie2 zdatass oobase_ Mbase_] = ... solve_one_constraint(modnam,modnamstar,... constraint, constraint_relax,... baseline2,irfshock,nperiods,maxiter); % Second time we solve simulation with baseline shocks and scenario [zdatascenario_lin2 zdatascenario_pie2 zdatass oobase_ Mbase_ ] = ... solve_one_constraint(modnam,modnamstar,... constraint, constraint_relax,... baseline2+scenario2,irfshock,nperiods,maxiter); % Note that we compute impulse responses in deviation from baseline % In simulation=1, baseline1 has a negative preference shock that takes economy to ZLB % In simulation=2, baseline2 has no negative preference shock for i=1:Mbase_.endo_nbr eval([deblank(Mbase_.endo_names(i,:)),'1 = zdatascenario_pie1(:,i)-zdatabaseline_pie1(:,i);']); eval([deblank(Mbase_.endo_names(i,:)),'2 = zdatascenario_pie2(:,i)-zdatabaseline_pie2(:,i);']); end % Construct interest rate in levels %rlevel_ss=1/BETA-1; %rlevel1=4*(r1+rlevel_ss); %rlevel2=4*(r2+rlevel_ss); %rlevel_ss=100*(1/BETA-1); %rlevel1=(4*(r1+rlevel_ss))/100; %rlevel2=(4*(r2+rlevel_ss))/100; %rlevel_ss=1/BETA-1; %rlevel_piecewise=400*(r_piecewise+rlevel_ss); %rlevel_linear=400*(r_linear+rlevel_ss); %rlevel_ss=1/beta-1; %rlevel1=400*(r1+rlevel_ss); %rlevel2=400*(r2+rlevel_ss); %% Modify to plot IRFs and decision rules titlelist = char('Interest Rate (Annualized)','Inflation (Annualized)','Output', 'Consumption', 'Labour tax shock'); %'Wage tax shock', figtitle = ''; line1=[r1,pibar1,Y1,C1,taun1]; %line1=[r1*4,infl1,y1,c1,tauw1,taus1]; line2=[r2,pibar2,Y2,C2,taun2]; %line2=[r2*4,infl2,y2,c2,tauw2,taus2]; %rlevel1 %rlevel2 % Figure 1: Plot dynamic simulation legendlist = cellstr(char('ZLB','No ZLB')); %('ZLB','No ZLB')); %'Wages tax cut','Sales tax cut' ylabels = char('Deviation from ss','Deviation from ss','Percent from ss', 'Percent from ss', 'Percent from ss'); figlabel = ''; makechart(titlelist,legendlist,figlabel,ylabels,line1,line2) %titlelist = char('Output','Sales Tax','Interest rate','Consumption','Inflation', 'ut'); %ylabels = char('percent deviation from baseline',... % '% of GDP, deviation from baseline',... %'ppoints deviation from baseline, annualized',... %'percent deviation from baseline',... %'percent deviation from baseline'); %figtitle = ''; %line1=100*[y1,taus1,rlevel1,c1, infl1, ut1]; %line2=100*[y2,taus2,rlevel2,c2, infl2, ut2]; %legendlist = cellstr(char('ZLB',' No ZLB')); %figlabel = ''; %makechart(titlelist,legendlist,figlabel,ylabels,line1,line2)