Dynare forums

Dear all,

which alghoritm is used to compute optimal simple rules in Dynare?

Is that of Dennis, R. (2004): Solving for optimal simplerule s in rational expectations models???

Thank you.

Jan

Not exactly. The algorithm is documented in detail in the manual. It differs from the ones in Dennis (2004) as the objective function is different. Dennis uses a discounted sum of squares while Dynare does use the unconditional expectations.