Hi,
In Dynare, optimal policy rule under commitment (Ramsey problem) can be solved using OLR. In the forum, I also found A. Levin code to compute Ramsey policy. What's the difference between these two?
Thank you.
Emma
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A. Levin's code Vs. OLR,what's the difference?
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A. Levin's code Vs. OLR,what's the difference?
by emma » Thu Mar 01, 2007 10:15 pm
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by MichelJuillard » Fri Mar 16, 2007 9:09 pm
OLR should only be used with linear models and not with linearized models. Otherwise the result is wrong.
If you have a nonlinear model and that you want to get a linear (or second order) approximation of the optimal policy, use A. Levin procedure. I will soon release a way of doing it directly in Dynare version 4.
Best
Michel
If you have a nonlinear model and that you want to get a linear (or second order) approximation of the optimal policy, use A. Levin procedure. I will soon release a way of doing it directly in Dynare version 4.
Best
Michel
- MichelJuillard
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- Joined: Thu Nov 18, 2004 10:51 am
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