Ramsey fiscal policy

[S_V]

Dear All,

I would like to set up and solve a Ramsey optimal fiscal policy problem in Dynare. The way the authors in the area of research similar to mine do this involves choosing tax rates and other variables to maximise the expected lifetime discounted utility subject to a Present Value Implementability (PVIC) constraint and other constraints. This is the same sort of problem I would like to solve.

I was wondering whether this is something Dynare can do (and possibly a reference for this)? Also, is there a different way to set up such a problem in Dynare?


Many thanks

[jpfeifer]

Please have a look at
https://www.google.de/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&uact=8&ved=0ahUKEwiNzaCj2uLSAhWB2ywKHYgmA3EQFghLMAQ&url=http%3A%2F%2Fwww.monfispol.eu%2Freports%2Freport_1.1.2.pdf&usg=AFQjCNEWtAox51BmcuOpzsN0FKEZ5eijHg&sig2=FoGYZDlWwTH5gTvSwN7Y_g
as well as the example
https://github.com/JohannesPfeifer/DSGE_mod/blob/master/Gali_2015/Gali_2015_chapter_5_commitment.mod

[S_V]

Dear Prof. Pfeifer, many thaks for the links.

Can I also please confirm something with you. Is it okay to use a linear utility function of the form log(c_t) with the ramsey_policy command or must utility be non-linear?

Many thanks

[jpfeifer]

Code: Select all

log(c_t)

is not linear. There is a log in it.

[S_V]

My apologies.

Can log(c_t) be used with the ramsey_policy command?

Many thanks

[jpfeifer]

Of course.