Hi, i just started using dynare and im trying to replicate Arias, Hansen and Ohanian (2006).

The first order conditions i derived were:

- d.L/d.c(t) ==> beta^t/c(t) = lambda(t)
- d.L/d.c(t+1) ==> beta^(t+1)/c(t+1)=lambda(t+1)
- d.L/d.n(t) ==> -beta^t
*theta(t)*(alpha*log(1-omega-h*e(t))+lambda*exp(z1)*(u(t)*k(t))^(1-alpha)*(e(t)*u(t)*h)^(alpha-1)*n(t)*h) = 0 - d.L/d.e(t) ==> -(beta^t*(1-n)
*theta(t)*(alpha*h)/(1-omega-h*e(t)) + lambda*exp(z1)*(u(t)*k(t))^(1-alpha)*(e(t)*n(t)*h)^(alpha-1)*n(t)*h = 0 - d.L/d.u(t) ==> lambda(t) = lambda(t+1)*((1-alpha)
*exp(z1)*(u(t+1)*k(t+1))^(-alpha)*u(t+1)*(e(t+1)*n(t+1)*h)^(alpha) + (1-gamma*u(t+1)^(phi))) - d.L/d.k(t+1) ==> lambda*((1-alpha)
*exp(z1)*(u(t)*k(t))^(-alpha)*k(t)*(e(t)*n(t)*k(t)*u(t)^(phi-1)) = 0*h)^(alpha) - gamma*phi - d.L/d.lambda

with that, i have the attached .mod file, but when i try to run it, it tells me that there is spurious convergence.

I have not calibrated the model and havent calculated the steady state so some parameters and init values apre probably incorrect. Could this cause the error?

If so, how can i calculate the steady state using matlab?

Thank you everyone,

Ignacio

hansen4.mod (1.33 KB)