ramsey policy: is there a bug?
Posted: Tue Jul 10, 2012 7:37 pm
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.
Is there an explanation for such phenomenon?
Many thanks in advance,
Bianca
I have experienced this issue with different models.
Is there an explanation for such phenomenon?
Many thanks in advance,
Bianca