Unless I specify the planner’s discount factor to be marginally above the private sector’s discount factor, I run into indeterminacy problems. To get a determinate solution, the planner’s discount factor only needs to be marginally different to the private sector one (e.g. 0.99001 vs. 0.99)
I have experienced this issue with different models – from a simple New Keynesian model to a real model with heterogeneous agents (the .mod file for the simple New Keynsian model is attached).
Is there an explanation for such phenomenon?
Many thanks in advance,
Bianca
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Planner’s discount factor in “Ramsey Policy” routine
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Planner’s discount factor in “Ramsey Policy” routine
by bipaoli » Wed Jun 27, 2012 9:20 pm
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