I have been trying to work with the model from Garcia_Cicco et. al. (2010) - “Real Business Cycles in Emerging Countries?” -
and I have the following after I run the program:
??? Error using ==> steady_ at 132
STEADY: convergence problems
Error in ==> steady at 54
steady_;
Error in ==> model2 at 156
steady;
Error in ==> dynare at 120
evalin(‘base’,fname) ;
[code]// Model Garcia-Cicco
%----------------------------------------------------------------
% 1. defining variables
%----------------------------------------------------------------
var y, c, h, k, d, r, a, g, x;
varexo ea, eg, rw;
parameters gamma, theta, beta, alpha, delta, rhoa, rhog, psi, phi, omega, dbar, gbar;
%----------------------------------------------------------------
% 2. calibration
%----------------------------------------------------------------
gamma = 2.00;
theta = 2.24;
beta = 0.9224;
alpha = 0.32;
delta = 0.1255;
rhoa = 0.765;
rhog = 0.828;
psi = 0.001;
phi = 3.3;
omega = 1.6;
dbar = 0.007;
gbar = 1.005;
%----------------------------------------------------------------
% 3. model
%----------------------------------------------------------------
model;
h^(omega) = (1-alpha)y/(thetax(-1));
(c(+1) - ((theta)x(h(+1)^(omega))/(omega)))^(gamma)/(c - ((theta)x(-1)(h^(omega))/(omega)))^(gamma) = beta*(1+r);
k = beta*(c - ((theta)x(-1)(h^(omega))/(omega)))^(gamma)(alphay(+1) + k*(1 - delta - (phi/2)((k(+1)/k - g)^2 - 2k(+1)/k*(k(+1)/k - g))))/((c(+1) - ((theta)x(h(+1)^(omega))/(omega)))^(gamma)(1 + phi((k/k(-1))-g)));
y = a*(k(-1)^(alpha))((xh)^(1-alpha));
ln(a) = rhoaln(a(-1)) + ea;
k = y - c + (1-delta)k(-1);
r = rw + psi(exp((d/x)-dbar)-1);
g = x/x(-1);
ln(g(+1)/gbar) = rhogln(g/gbar) + eg;
end;
%----------------------------------------------------------------
% 4. computation
%----------------------------------------------------------------
initval;
y = 0.2217;
c = 0.1791;
h = 0.1851;
k = 0.3217;
d = dbar;
r = rw;
a = 1;
g = gbar;
x = 1;
ea = 0;
eg = 0;
rw = 0.04;
end;
steady;
solve_algo = 1;
shocks;
var ea; stderr 0.027;
var eg; stderr 0.03;
end;
stoch_simul;
[/code]
Does anyone know what I have done to not achieve the steady state? I even adapted some initial values to be close to the model used here.
Thanks in advance
model2.mod (1.7 KB)