numerica optimization for optimal policy problem

[aadegboye abiodun]

Hi,
page 52 of the Dynare reference manual 2011 version mentioned that the optimal simple policy rules for LQ problems is solved using numerical optimizer. Please where is the optimizer ? . Generally, please guide me I want to follow Fragetta and Kirsanva 2010 in European Economic Review paper on Strategic Monetary and Fiscal Policy Interactions in finding optimal policy but numerical stuff was mentioned. Kindly guide. How do I go about doing it using Dynare which I am learning to be an intermediate user.
Your reply is appreciated

Abiodun

[jpfeifer]

What exactly is your question? If you want to compute optimal policy, you need to use the osr-command. See for example https://github.com/DynareTeam/dynare/blob/master/tests/optimal_policy/osr_example.mod

[aadegboye abiodun]

Hi jpfeifer,

I appreciate your prompt reply. How do I perform optimal policy under discretion? Have you any example such as the osr you suggested previously?

abiodun

[jpfeifer]

See the manual on discretionary_policy and https://github.com/DynareTeam/dynare/tree/master/tests/discretionary_policy

[aadegboye abiodun]

Hi,
I appreciate your guide. I read the manual and the site you posted here. The following model was run and I got the remark

'' error using discretionary_policy_1 line 82 ' ' '' discretionary_policy: the model must be written in deviation form and not have constant terms.''


I try but could not locate the constant term. A guide should be appreciated. Kindly guide me.

I also attach the model

[jpfeifer]

Your third equation divides by B_ss, but this is 0.

[aadegboye abiodun]

Hi ,
kindly assist.
I have oo_ file but want to do shock_decomposition. kindly guide how do I go around it

[jpfeifer]

I don't understand your reply. Your model setup seems to be wrong. Did you correct the issue I pointed out?