Welfare in Ramsey Policy

As Dynare 4 is now the main version, this forum is now closed. Please, post
on the Dynare Help forum
Forum rules
As Dynare 4 is the current Dynare version, there forum is now close. Post new question in the Dynare Help Forum.

Welfare in Ramsey Policy

Postby bcarton » Tue Feb 24, 2009 3:39 pm

Dear all,
'Ramsey policy' compute the first order approximation of the optimal policy rule. I would like to compute the second order approximation of welfare given by this rule.
My first idea was to write the model with the rule given by ramsey policy but it also depends on (state) lagrange multiplier and I don't know how to get the equations for the lagrange multipliers.
Benjamin
bcarton
 
Posts: 4
Joined: Fri Apr 13, 2007 1:05 pm
Location: Paris

Re: Welfare in Ramsey Policy

Postby StephaneAdjemian » Tue Mar 31, 2009 9:56 am

Hi Benjamin,

It is not possible to use the ramsey_policy command of dynare to compute the welfare because, as you say, this command performs only a first order approximation. If you want to compute a second order approximation, you have to write yourself the (non linear) equations of the Ramsey allocation in the model block (non linear foc + equations for the Lagrange multiplier). This can be done using the symbolic math toolbox of matlab or, if you don't want to pay for this, the symbolic math library of python (sympy).

Best,
Stéphane.
Stéphane Adjemian
Université du Maine, GAINS and DynareTeam
https://stepan.adjemian.eu
StephaneAdjemian
 
Posts: 429
Joined: Wed Jan 05, 2005 4:24 pm
Location: Paris, France.


Return to Dynare version 4

Who is online

Users browsing this forum: No registered users and 1 guest