Nonlinear simulations

This tutorial illustrates the use of the IrisT stacked time method for running nonlinear simulations, using a gap model with a fiscal extension including stock-flow relationships and sovereign risk function.

Model source files

The model source files are located in the model-source/ subfolder.

The model is split into three files:

• model-sourcce/macro.model for the local macro economy;

• model-source/fiscal.model for the fiscal extension;

• model-source/world.model for the rest of the world variables.

The model contains three nonlinearities:

• a nonlinear sovereign risk function based on a generalized logistic distribution function, see model-source/fiscal.model;

• a convex Phillips curve, see model-source/macro.model;

• a zero interest rate floor, see model-source/macro.model.

Matlab scripts

Run the Matlab scripts in the following order:

1. createModel

2. comparativeStatic

3. simulateScenarios

Matlab live scripts

The stand-alone calibrateRiskFunction.mlx live scripts show the properties and parameterization of the sovereign risk function.