NK Model

[vetox]

Hi everybody!

I’m new here and have a probably pretty easy question. In this context I try to compare different policy rules like Taylor Rule, Christiano etc. My problem is now, that I have no idea how to integrate the “Smets and Wouters”.

[jpfeifer]

You have to change the

interest = r*400; //*
inflation = (100/4)*(4*pi+4*pi(-1)+4*pi(-2)+4*pi(-3)); //*
inflationq = pi*400; //*
outputgap = x*100; //*
output = y*100; //*
//**************************************************************************


//**************************************************************************
// Policy Rule //*
//*
// Monetary Policy //*
//*
interest = cofintintb1*interest(-1) //*
+ cofintintb2*interest(-2) //*
+ cofintintb3*interest(-3) //*
+ cofintintb4*interest(-4) //*
+ cofintinf0*inflationq //*
+ cofintinfb1*inflationq(-1) //*
+ cofintinfb2*inflationq(-2) //*
+ cofintinfb3*inflationq(-3) //*
+ cofintinfb4*inflationq(-4) //*
+ cofintinff1*inflationq(+1) //*
+ cofintinff2*inflationq(+2) //*
+ cofintinff3*inflationq(+3) //*
+ cofintinff4*inflationq(+4) //*
+ cofintout*outputgap //*
+ cofintoutb1*outputgap(-1) //*
+ cofintoutb2*outputgap(-2) //*
+ cofintoutb3*outputgap(-3) //*
+ cofintoutb4*outputgap(-4) //*
+ cofintoutf1*outputgap(+1) //*
+ cofintoutf2*outputgap(+2) //*
+ cofintoutf3*outputgap(+3) //*
+ cofintoutf4*outputgap(+4) //*
+ cofintoutp*output //*
+ cofintoutpb1*output(-1) //*
+ cofintoutpb2*output(-2) //*
+ cofintoutpb3*output(-3) //*
+ cofintoutpb4*output(-4) //*
+ cofintoutpf1*output(+1) //*
+ cofintoutpf2*output(+2) //*
+ cofintoutpf3*output(+3) //*
+ cofintoutpf4*output(+4) //*
+ std_r_ *interest_;

part. For the Gerdesmeier and Roffia rule that is straightforward, because the variables you need are already defined. For the Smets/Wouters rule this is more complicated, because you would need to define the flex-price output.

[vetox]

Hey jpfeifer. Thanks for your answer.