min(DISC) EXPRESSION;
min#(DISC) EXPRESSION;
The loss function must be types as one of the transition equations. The DISC
is a parameter or an expression defining the discount factor (applied to future dates), the EXPRESSION
defines the loss fuction proper.
If you use the min#(DISC)
syntax, all equations created by differentiating the lagrangian w.r.t. individual variables will be earmarked for exact non-linear simulations provided the respective derivative is nonzero.
This is a simple model file with a Phillips curve and a quadratic loss function.
!transition_variables
x, pi
!transition_shocks
u
!parameters
alpha, beta, gamma
!transition_equations
min(beta) pi^2 + lambda*x^2;
pi = alpha*pi{-1} + (1-alpha)*pi{1} + gamma*y + u;