Hi, I am trying to replicate a paper by Christensen and Dib (2008) but as opposed to their log-linear formulation, I want to work with the non-linear model. I computed the steady state with pen and paper but my code fails to compute it (“Error using print_info (line 72) The steadystate file did not compute the steady state”). I don’t know if this necessarily means that there is a mistake in the pen-paper calculations, or if this might also be ralated to the initial values (e.g. of the shocks).
I believe there is also a problem with equation 9 of the code (eqs. (A.9) and (A.10) in the paper attached). I’m not sure how to deal with the infinite sum in the code.
Christensen, Dib (2008).pdf (1.89 MB)
CD08_nonlinear_ss1.mod (5.46 KB)
For the infinite sum, you need to find a recursive representation. See the NK_baseline.mod and its included references for an example.
You most important mistake with the steady state is that you enter the steady state for the variable in levels, but due to your exp() substitution, the model variables are in logs. Start by first making the model without the exp() run and only then go to loglevels.
Dear Johannes,
thanks a lot! I modified the code to express the model in levels, and also formulated the infinite sum recursively as in NK_baseline.mod. Now there are way less equations with positive residuals. However, I still fail to compute the steady state. Do you have any advice on how to proceed with the equations that have positive residuals? I have double-checked the model several times and can’t find the mistake.
Thank you!
CD08_nonlinear_ss0.mod (6.13 KB)