Hi,

I have this model, where all the explanations are provided as comments. Can somoeone suggest whether the particular mdoel is possible to be solved by dynare/dynare++. And if not, how I can modified to be able to solve it ?

[code]var list;

varexo e;

parameters list;

%% All assets at time {t+1} are decided at time t for the agents. Hence all assets are predetermined.

model;

\consumers - Stationary Model

varrho=(v(+1)*R(+1))^(1-gamma); % Aux. Variable for Epstein-zin preferences

v=(1+(beta^(1/mu))*varrho^(par))^(1/((1/mu)-1)); % Recursive equation for the value function

u=v^(1-(1/mu)); % Marginal propensity to consume out of wealth

\portfolio choice - Static

(v(+1))^(1-gamma)*R(+1))^(-gamma)*(Rk(+1)-Rf(+1))=0; % 1st FOC for portfolio choice

(v(+1))^(1-gamma)*R(+1))^(-gamma)*(1+rh(+1)-delta+ eta(+1)-Rf(+1))=0; % 2nd FOC for portfolio choice

// definitions

R(+1)=(1-theta1(+1)-theta2(+1))*Rf(+1)+theta1(+1)*Rk(+1)+theta2(+1)*Rh(+1); % Gross returns - I take the expected value for dynare to understand eta=0 in SS

Rf=1+rf; % Gross risk-free return

Rk=(1+rk-delta); % Gross Risky returns from capital along the cycle

Rh=1+rh-delta+eta; % Gross Risky returns from Human Capital

premium=rf-rk; % Risk premium

theta1=k(-1)/s(-1); % Share of Phyisical capital asset - theta1(+1) is known in t

theta2=1/s(-1); % Share of Human Capital asset - theta2(+1) is known in t

s=b+k+1; % Wealth

//supply-side

y=A*k(-1)^alpha; % output
rk=A*alpha

*k(-1)^(alpha-1); % real returns to physical capital*

rh=A(1-alpha)*k(-1)^alpha; % real returns to human capital

rh=A

//government

b*(1+gr)+tauk*rk(-1)*k(-1)+tauh*rh(-1)=(1+rf)*b(-1)+g(-1); %Government budget constraint
g=pi*y; %government spending rule

//expected growth rate

gr(+1)=R(+1)(1-u);

//exogenous shocks

log(A)=rho*log(A(-1))+(1-rho)*logAA +e; % AR(1) for aggregate shocks
eta=sigmat*e; % IID normally distributed

% idiosyncratic shock with zero mean and time varying variance sigmat^2

% Assumption, the idiosyncratic shock is indepedant from the aggregate

sigmat^2=(sigma*(1-elas*ln(A)))^2] % the rule for variance

end;

%% Steady state Definition

% 1. Deterministic Macroeconomic Steady state => Aggregate Shocks are switched-off and TFP normalized to 1

% 2. Individual shocks are still present ==> eta process switches from Heteroskedastic to homoskedastic with sigmat^2=sigma^2

%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

%

% Hence the model is isomorphic to a one agent model with two types of shocks

% where the one type of shock (Aggregate) switches-off while the idiosyncratic still operates

% from the assumptions of the model we know - AGGREGATE variables are deterministic and the distribution is not a relevant state variable

% In terms of assets, the model switches from three different types of assets along the Business Cyle to two

% types of assets in the Steady State, since Rf=Rk

%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% [/code]

Letâ€™s suppose, that I can solve the model myself in the SS by my own program. Can Dynaree++ use my steady state file in order to calculate the transitional dynamics (aka impulse responses etc etc.)