Ramsey policy

[jameszhow1985]

I read some notes of ramsey policy implemented in dynare. Someone put the guess value of instrument variable in the initval block, the others set the guess value of instrument variable in the steady_ state_model block. But I find the above two ways can generate different steady state values and impulse response functions. Which way should I follow?

[jpfeifer]

The steady_state_model-block is always preferrable. With initval, you just provide starting values and Dynare can stop at any steady state if there are multiple ones. With the steady_state_model-block, you provide an analytical steady state that you select. Presumably, this is the steady state you are looking for.

[jameszhow1985]

The steady_state_model-block is always preferrable. With initval, you just provide starting values and Dynare can stop at any steady state if there are multiple ones. With the steady_state_model-block, you provide an analytical steady state that you select. Presumably, this is the steady state you are looking for.

Thank you Professor Pfeifer for your immediate reply.