Countercyclical banking capital buffers in a DSGE model


I’m trying to replicate the paper of Santiago Caicedo Soler (2012) Countercyclical banking capital bueers in a DSGE model. Every time I run the model I get the following error message:

Error using print_info (line 74)
Impossible to find the steady state. 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

Error in steady (line 92)
print_info(info,options_.noprint, options_);

Error in countercyclical_replication (line 396)

Error in dynare (line 180)
evalin(‘base’,fname) ;

I know this is a very common problem for dynare rookies but I cannot find where my error is.
In this paper, I can’t find the equation for wage is missing, so I set it with constant value. However, it didn’t work. Please find it help me?
Moreover, I don’t know whether I program correctly or not.

Any additional help would be much appreciated.

Countercyclical banking capital buffers in a DSGE model - 2012.pdf (608 KB)
countercyclical_replication.mod (5.67 KB)

What do you mean? The paper only reports the setup, but not the first order conditions. You have to derive and enter them yourself. For example, in the firm problem you will get an FOC for the optimal labor input that will determine the labor demand. The household side will have a labor supply equation stating that the marginal rate of substitution equals the real wage. Together with a market clearing condition, this will determine the wage.