Hi,

I took the traditional deterministic neoclassical growth model and extended it by adding a female agent in the household. Both agents supply hours individually but consume and save jointly. Besides, I added “on-the-job” human capital accumulation for each type of agent (male and female), i.e., the human capital law of movement is a function of hours worked. All functional forms are standard.

I can’t solve for the steady-state analytically. Dynare can’t solve it numerically.

Does anyone have an insight about why Dynare is not able to find the steady-state in this setup?

Many thanks!

simulation_v2_3.mod (4.8 KB)

I changed the human capital depreciation value and some initial values and now I get the following message:

Error using print_info (line 32)

One of the eigenvalues is close to 0/0 (the absolute value of numerator and denominator is

smaller than 0.0000!

If you believe that the model has a unique solution you can try to reduce the value of

qz_zero_threshold.

Error in check (line 48)

print_info(info, 0, options);

Error in simulation_v2_3.driver (line 259)

oo_.dr.eigval = check(M_,options_,oo_);

Error in dynare (line 293)

evalin(‘base’,[fname ‘.driver’]) ;

simulation_v2_3.mod (4.8 KB)

Are you sure your steady states make sense?

```
y 2.70432e+08
c 1.73467e+08
x 9.69654e+07
k 3.73844e+09
l 1.95626e+07
lm 318.819
lf 670.765
hm 31881.9
hf 67076.5
r 0.0361691
wm 6.91198
wf 4.70015
```

The differences in size may cause numerical issues.

Many thanks for your reply! The large numbers are probably because the stock of human capital gets large in the SS (`hm`

and `hf`

). Therefore, `(y, c, x, k, l)`

get large.

I can update the human capital accumulation functions by multiplying hours by a constant to normalize human capital values. Let’s see if it works.