Dynare forums

I am trying to use the "discretionary policy" routine in Dynare 4.3.0. But although the manual says that I can specify a non-linear policy objective, when trying to run it I receive a message that "discretionary_policy solves only linear_quadratic problems"
Any help would be much appreciated.

Sorry, the manual is misleading. The discretionary_policy command solves only linear-quadratic problems.

All the best,

Michel

Also note that discretionary_policy won't work if you don't specify the "linear" option to the "model" block. We forgot to document this; it will be fixed in future releases.

To be yet more explicit, discretionary_policy in Dynare works correctly only if
1) the equations in the model are linear,
2) the option linear is used in the model statement
3) the objective function is purely quadratic (I'm not sure that this last condition is correctly tested by Dynare)

Best

Michel