Ramsey problem and multiplier equal to zero

[petros_varth]

Hi All,

When I solve the Ramsey problem, is it possible to set one of the Lagrange multipliers associated with one equation equal to zero in steady-state.

In other words, use this equation as a constraint which holds only in steady-state.

Any ideas.

Thanks.

P.

[jpfeifer]

Hi Petros,
I am not sure I understand the intuition. It seems you are trying to confront the Ramsey planner with an occasionally binding constraint that only holds in steady state.

[petros_varth]

Hi Johannes,

Yes exactly.

P.

[jpfeifer]

Occasionally binding constraints are not easily handled by Dynare See the Occbin toolkit. For Ramsey that is currently not possible.

[petros_varth]

Many thanks.
I will check the Occbin toolkit.

P.