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using simul, problem in law of motion in foreign debt ?

: 28 kwie 2018, o 13:02
autor: faelanstevie
Hi All,

I am solving a deterministic Ramsey (not DSGE) small open economy model. The setup is very similar to "“Closing Small Open Economy” by Schmitt-Groh & Uribe and I use debt dependent interest to pin down the steady state. the only difference is that in my model shock is unexpected ex-anti so I should use simul. I can solve the steady state without any problem and I set debt to be zero in the final steady state. My mod code can give me the transition path under shock path of TFP. However, the debt level has a jump during the last period and that law of motion in foreign debt does not hold in the last period.
In the model section I put
b=(1+rworld+rfun(b(-1),bbar, ppsi ))*b(-1)-nx;

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