Dynare's homotopy command


#1

Hi together,

I was wondering for which size of models can Dynare’s homotopy command expected to be useful for finding the steady-state?

More specifically, my situation is the following: I have a ca. 100 equation model (medium-scale policy analysis model) that I am able to find the steady-state of by using some empirical moments (great-ratios) etc. and choosing the appropriate parameter values. I would like to run deterministic simulations now that permanently shift the steady-state. For example, I need to find the new steady-state for a permanent increase in government consumption, but to do so I obviously cannot use the empirical moments since I expect those to shift permanently as well. I have thus tried using homotopy on the exogenous shock to government expenditures but it fails independent of the step-size (“WARNING: homotopy step was not completed”).

Thanks,
Ivan


#2

Update: I have followed GIMF’s set-up and used the block and bytecode option for the model block. This helps Dynare finding the steady-state numerically and made homotopy work.

I am happy to hear comments / experiences on this issue nevertheless in case anybody worked on similar things.

Thanks