Dynare forums

Dear all,

I waited for the new version of Dynare in order to compute the optimal policy under discretion of my model.
As far as the case under commitment is concerned, I used the command "ramsey_policy". Everything ran smoothly
and I was able to obtain the results of the paper I am replicating.
Sadly, if I replace the "ramsey_policy" command by the "discretionary_policy" one, Matlab reports several errors.
For instance "??? Reference to non-existent field 'instruments'". Another user reported the same problem with version
4.2.0 in the context of the "ramsey_policy" command at viewtopic.php?f=1&t=3119.

What I don't get is why in the case of commitment I don't need to specify instrument variables for the "ramsey_policy"
command but in the case of "discretion_policy" I have to in order to avoid this error.
Including the "steady_state_model" block (as suggested by other users) doesn't seem to help. Matlab reports that several
matrices are singular, etc.

In the attachment you can find the mod.file for optimal policy under commitment which was computed with the "ramsey_
policy" command. Would be nice if you could give me a piece of advice on how to compute the optimal policy under
discretion with the new command "discretionary_policy" in Dynare version 4.3.0.

Thank you very much in advance,
Francis

Dear Francis,

indeed discretionary_policy requires the use of option instruments. In the case of your model, the instrument is 'i'.

Also, for your model, it is necessary to increasing the maximum number of iterations.

Going thru your example, I discovered some bugs in the last version of Dynare that will be corrected in tomorrow's unstable version.

I attach my version of your model.

Best

Michel

Thank you very much for your help Michel!

With the current version I get the error "ERROR: discretionary.mod:51.76-86: syntax error, unexpected NAME".
Guess I'll wait for the corrected version and give some feedback.

Best,
Francis

Dear Michel,
now everything runs perfectly.
Thank you very much again!

Best wishes,
Francis