I have problems with the optimal simple rule.
I tried in the policy rule:
m=gamma1*y(-1)+gamma2*p(-1)+gamma3*e(-1)+gamma4*m(-1);
and I get "Blanchard Kahn conditions are not satisfied: no stable equilibrium"
I change the policy rule to:
m=gamma1*y(-1)+gamma2*p(-1)+gamma3*e(-2)+gamma4*m(-1);
and I get the objective function negative.
I made different policy rules with different policy rules and they worked without problems.
How can I solve this problem??
Thanks