runsim_cgg.m

%% set inputs for solution below
%  The program produces responses to the shocks selected below under
%  irfshock. Paths for all the endogenous variables in the model selected
%  are produced. VariableName_piecewise holds the piece-wise linear solution for
%  VariableName.  VariableName_linear holds the linear solution for
%  VariableName.

addpath('toolkit_files\')
global M_ oo_

% modname below chooses model
% directory. But simple param choices are made from paramfile in current
% directory.
modnam = 'cgg';
modnamstar = 'cgg_zlb';

% express the occasionally binding constraint
% in linearized form
% one can use any combination of endogenous variables and parameters
% declared in the the dynare .mod files
constraint = 'r<(1-1/BETA)';
constraint_relax ='rnot>(1-1/BETA)';

% Pick innovation for IRFs
irfshock =char('eps_g');      % label for innovation for IRFs
% needs to be an exogenous variable in the
% dynare .mod files

shockssequence = [
    zeros(4,1)
    -0.06
    zeros(20,1)
    0.06
    ];         % scale factor for simulations
nperiods = size(shockssequence,1)+20;            %length of IRFs

% generate model IRFs
[zdatalinear, zdatapiecewise, zdatass, oobase_, Mbase_  ] = ...
    solve_one_constraint(modnam,modnamstar,...
    constraint, constraint_relax,...
    shockssequence,irfshock,nperiods);


% unpack the IRFs
for i=1:Mbase_.endo_nbr
    eval([Mbase_.endo_names{i,:},'_linear=zdatalinear(:,i);']);
    eval([Mbase_.endo_names{i,:},'_piecewise=zdatapiecewise(:,i);']);
    eval([Mbase_.endo_names{i,:},'_ss=zdatass(i);']);
end

% Construct interest rate in levels
rlevel_ss=1/BETA-1;
rlevel_piecewise=400*(r_piecewise+rlevel_ss);
rlevel_linear=400*(r_linear+rlevel_ss);


%% Modify to plot IRFs and decision rules
titlelist = char('r (Interest Rate)','p (Inflation)','y (Output)','g (Demand Shock)');

figtitle = '';
line1=[rlevel_piecewise,p_piecewise*400,y_piecewise*100,g_piecewise*100];
line2=[rlevel_linear,p_linear*400,y_linear*100,g_linear*100];

% Figure 1: Plot dynamic simulation
legendlist = cellstr(char('Piecewise Linear','Linear'));
ylabels = char('Percent Level, Annualized','Percent from ss, Annualized','Percent from ss','Percent from ss');
figlabel = '';
makechart(titlelist,legendlist,figlabel,ylabels,line1,line2)