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Monacelli Exchange Rate and Fiscal Policy

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Monacelli Exchange Rate and Fiscal Policy

Postby Philipp » Mon Sep 12, 2011 8:48 pm

Hi Dynare-People!

I am currently working on a paper by Monacelli (2006) on Fiscal Policy, the Trade Balance and the Exchange Rate. To start with I wanted to compute and simulate a simple SOE model a la Gali Monacelli in combination with Fiscal policy. The thing is, there must be some unit root in my system and the Blanchard-Kahn condition are not satisfied. I would appreciate your help very much, as I don't see anymore, where the mistake can be found.
Attachments
Master.pdf
DSGE Equilibrium Conditions (linear)
(229.28 KiB) Downloaded 250 times
monacelli.pdf
Monacelli Pesenti 2006
(491.35 KiB) Downloaded 235 times
simple.mod
mod File
(3.88 KiB) Downloaded 166 times
Philipp
 
Posts: 36
Joined: Mon Apr 18, 2011 9:01 pm
Location: State Secretariate for Economic Affairs
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Re: Monacelli Exchange Rate and Fiscal Policy

Postby Philipp » Wed Sep 14, 2011 6:28 pm

I figured it out. There were some redundant equations and the effective rer has to be taken in 1st differences.

I post the models for you, in case you are interested in its simulation.

Philipp
Attachments
simple.mod
Working model (SOE with fiscal policy)
(3.62 KiB) Downloaded 348 times
Philipp
 
Posts: 36
Joined: Mon Apr 18, 2011 9:01 pm
Location: State Secretariate for Economic Affairs
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