I’m trying to extend Jermann and Quadrini (2012) into a two country model by now considering a case of financial integration (households across both countries are debtholders and equity holders for firms in both countries). I have found the steady state, but the Schur decomposition doesn’t go through. Any advice would be greatly appreciated. At this point in time I’m using V 4.5.7 of Dynare.
Integration_level.mod (3.6 KB)