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Dynare exercise


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Dynare exercise

  1. 1. Dynare Exercise
  2. 2. Outline• Review Dynare syntax• Exercises with simple NK model – Rationale for the Taylor principle. – Potential conflict between working capital channel  and Taylor principle. – Sensitivity of dynamic response of inflation and  output gap to persistence of shock. – In examples when Taylor rule moves the interest rate  in the right direction, does not move it far enough. – The Taylor rule may push the interest rate in the  wrong direction when there are news shocks.