DSGE model with three households

DSGE_questions.pdf (40.3 KB)

Hi all,

I have a problem on solving the steady-state of a model with 3 households. Could you please tell me which condition am I missing?


The budget constraint is a first order condition as well.

Hi Prof.,

Thanks for your reply. I considered the budget constraint already. The problem is that the Euler equations for all the households become the same (1/R = beta) in the steady-state, making the number of FOCs less than the number of endogenous variables.

Are you sure your model has a unique steady state? If all agents are the same, then any allocation of bonds and thereby consumption will be feasible.

Yes, the steady state is not unique. Thanks for your help!