Endogenous discount factor. Mendoza 91

Dynare help (legacy posts)
1

Hi, I’m trying to replicate Mendoza’s 91 model using the first order conditions of Schmitt-Grohé and Uribe 2002, but when I run the model I get

??? Error using ==> print_info at 52
Impossible to find the steady state. Either the model doesn’t have a unique steady state of the guess values
are too far from the solution

Error in ==> stoch_simul at 46
print_info(info, options_.noprint);

Error in ==> hansen1 at 148
info = stoch_simul(var_list_);

Error in ==> dynare at 132
evalin(‘base’,fname) ;

Could someone help me? It’s urgent. What’s wrong?

Daniel
hansen.mod (1.22 KB)

2

The initial values that you are providing are far from solving the nonlinear static model. Errors are specially large on the 2nd and 3rd equation. Maybe you made a typo writing the model in the *.mod file or deriving by hand the steady state.

Also, please look at the User Guide to understand the timing convention used in Dynare

Best

Michel