Basic question about the steady state

Steady state
1

Dear professor,
I am new to dynare, so I apologize for my question being basic.
I wrote a simple model, but when I run the code, dynare said:

Impossible to find the steady state (the sum of square residuals of the static equations is 0.1145).
Either the model doesn’t have a steady state, there are an infinity of steady states, or the guess
values are too far from the solution

I calculated the steady state manually, I think it is correct. I don’t know how to solve this promblem.
Please help.
Thanks in advance.

model.mod (4.1 KB)

2

You should figure out what is wrong in steady state with the following equations

Equation number 5 : 0.34473 : Y
Equation number 6 : 0.20718 : P
Equation number 7 : 0.0020718 : Z
Equation number 8 : -0.16685 : R
Equation number 9 : 0.36596 : W

Also your production function looks strange
Y=A*(K(-1)^alpha)*(L*(1-alpha));
I think you meen
Y=A*(K(-1)^alpha)*(L^(1-alpha));

Maybe you should look at (L*(1-alpha)) in equations 5 to 9?

3 Likes
3

Thank you very much for your help! It was a foolish mistake.
I correct it and the stead state is OK.
But now I have a new problem, dynare said:

There are 2 eigenvalue(s) larger than 1 in modulus
for 3 forward-looking variable(s)
…
Blanchard & Kahn conditions are not satisfied: indeterminacy.

How to solve this problem? Could you give me some advice? Please.
Many thanks.

4

Please submit the corrected code.

5

The problem has been solved, thank you for your kind help again.