Hi
I would like to somehow implement the ZLC constraint with forward guidance somehow but not sure how to tackle it due to the non-linearity. I think I should somehow make an algorithm (or maybe I can use Holden's? I cannot figure out whether it is suitable for this) which keeps the short-term interest rate at 0 or 0.25 for a pre-specified period and then simulate/solve. It is only for a standard Benchmark New Keynesian model - I don't know if there is any code example out there?
Thx for help in advance
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ZLB constraint and forward guidance
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ZLB constraint and forward guidance
by h0ps » Wed Jan 22, 2014 10:01 pm
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Re: ZLB constraint and forward guidance
by jpfeifer » Mon Jan 27, 2014 10:09 am
See http://www.dynare.org/phpBB3/viewtopic.php?f=1&t=3104. You might also want to check if there is something in http://www.macromodelbase.com/ and take a look at "OccBin: A Toolkit for Solving Dynamic Models With Occasionally Binding Constraints Easily" at https://www2.bc.edu/matteo-iacoviello/research_files/TOOLKIT_PAPER.pdf
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Re: ZLB constraint and forward guidance
by h0ps » Tue Jan 28, 2014 8:43 am
Thank you - I will look into your links and return if I have any further questions. Thank you very much once more.
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