commit
901121fe30
|
@ -7160,7 +7160,7 @@ end;
|
||||||
This command computes the first order approximation of the policy that
|
This command computes the first order approximation of the policy that
|
||||||
maximizes the policy maker's objective function subject to the
|
maximizes the policy maker's objective function subject to the
|
||||||
constraints provided by the equilibrium path of the private economy and under
|
constraints provided by the equilibrium path of the private economy and under
|
||||||
commitment to this optimal policy. The Ramsey policy is computed is computed
|
commitment to this optimal policy. The Ramsey policy is computed
|
||||||
by approximating the equilibrium system around the perturbation point where the
|
by approximating the equilibrium system around the perturbation point where the
|
||||||
Lagrange multipliers are at their steady state, i.e. where the Ramsey planner acts
|
Lagrange multipliers are at their steady state, i.e. where the Ramsey planner acts
|
||||||
as if the initial multipliers had
|
as if the initial multipliers had
|
||||||
|
@ -7221,10 +7221,13 @@ taken to be at their steady state values. The result is a 1 by 2
|
||||||
vector, where the first entry stores the value of the planner objective when the initial Lagrange
|
vector, where the first entry stores the value of the planner objective when the initial Lagrange
|
||||||
multipliers associated with the planner's problem are set to their steady state
|
multipliers associated with the planner's problem are set to their steady state
|
||||||
values (@pxref{ramsey_policy}).
|
values (@pxref{ramsey_policy}).
|
||||||
|
|
||||||
In contrast, the second entry stores the value of the planner objective with
|
In contrast, the second entry stores the value of the planner objective with
|
||||||
initial Lagrange multipliers of the planner's problem set to 0, i.e. it is assumed
|
initial Lagrange multipliers of the planner's problem set to 0, i.e. it is assumed
|
||||||
that the planner succumbs to the temptation to exploit the preset private expecatations
|
that the planner exploits its ability to surprise private agents in the first
|
||||||
in the first period (but not in later periods due to commitment).
|
period of implementing Ramsey policy. This is the value of implementating
|
||||||
|
optimal policy for the first time and committing not to re-optimize in the future.
|
||||||
|
|
||||||
Because it entails computing at least a second order approximation, this
|
Because it entails computing at least a second order approximation, this
|
||||||
computation is skipped with a message when the model is too large (more than 180 state
|
computation is skipped with a message when the model is too large (more than 180 state
|
||||||
variables, including lagged Lagrange multipliers).
|
variables, including lagged Lagrange multipliers).
|
||||||
|
|
Loading…
Reference in New Issue