Complex Steady State

Hi everybody.

I’m trying to replicate the model by Cantore et All.(2023) with some preliminary changes. I have issues with the steady state. I think I have issies with the variable gamma, which I added to the model and it’s the average marginal utility w.r.t consumption. Apparently its steady state value is complex. I cannot see where the mistake is. I’ve assumed optimal subsidy tau_s to obtain a symmetric steady state consumption across agents.

thank you for your help.

I upload here the mod file
StickySingle_w_H.mod (4.4 KB)

Your marginal cost should be


Otherwise, it is negative.

Oh I see it. Thank you.

I have another curiosity related to the model. I should be able to get the same level of steady-state Consumption between Savers (S) and rule of thumb (H), but Consumption levels are never exactly the same. Is this because of the different behavior of the two agents (that have the same sources of income in steady-state) or is just a mistake and in theory it’s possible to obtain the same c level in steady state? Thank you

Without more details it is hard to tell. But conceptually both can have the same amount of consumption if the model is calibrated accordingly. But how exactly have the two the same income in steady state? The savers should have returns on savings.

Thank you!

I think consumption can be the same since profits are set to be 0 in steady state imposing an optimal subsidy. Is it correct?

This is not about firm profits but the return on savings/capital. Capital needs to provide returns to allow for the replacement of depreciated capital.

ok thanks. And with no capital in the model?

How can you have Ricardian agents without access to a net savings device?