Zero bounds in models
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- Posts: 21
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Zero bounds in models
Is there a way to impose a zero lower bound on an endogenous variable in a model? Would be very useful in the current environment...
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- Non-normality and collinearity are NOT problems!
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Re: Zero bounds in models
You may be able to "fake it" by modelling log(endogenousVariable) and then exponentiating.
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- Posts: 21
- Joined: Thu Sep 25, 2008 10:39 am
- Location: Washington DC
Re: Zero bounds in models
Thanks. I had thought of that approach, should work in most circumstances. Still, would be nice to include inequalities etc.
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- Non-normality and collinearity are NOT problems!
- Posts: 3775
- Joined: Wed Sep 17, 2008 2:25 pm
Re: Zero bounds in models
I agree with you. But optimization and model solution with inequalities is a lot harder than unconditional optimization.
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