entering the model in steady_state_model

Steady state
1

Hello, I’m a graduate student working with DSGE models and dynare for the first time, and I’m having a bit of trouble entering my model,
Bank retained earnings ln(CapIB) depends on its past and expected future values, and is driven by the relative shadow price of bank capital, according to:
ln(CapIB) = 1/(1+beta)*ln(CapIB(-1)) + beta/(1+beta)*ln(CapIB(+1))+…

When entering the model in steady_state_model, it seems that after removing time subscripts, the left-hand term and the two right-hand terms would cancel out 。
ln(CapIB) = 1/(1+beta)*ln(CapIB) + beta/(1+beta)*ln(CapIB)+…

because there are other terms on the right side of the equation. How should such a model be entered in Dynare? Is there a misunderstanding in my comprehension ?
Thank you for your help.

2

Without the full equation it is hard to tell. But the equation you show indeed does not pin down CabIB. I cannot judge whether that is a problem. The equation may pin down other things like a shadow price. Such a price often must be 1 regardless of the steady state value of the level of capital.

3

Thanks a lot, professor.

the full equation is:
ln(CapIB) = 1/(1+beta)*ln(CapIB(-1)) + beta/(1+beta)ln(CapIB(+1)) + 1/(chiB(1+beta))*ln(CapQB/CapPY);

ln(CapQB) is defined as “the shadow price of bank capital”, ln(CapQB/CapPY) is the relative shadow price of bank capital,the time subscripts are removed

4

That equation then seems to state

must be equal to 1 in steady state.

5

Thanks for the help, professor

Does it mean that, in steady state or entering in steady_state_model should be
CapIB = 1;

where CapQB/CapPY = 1

6

No, it means that this equation cannot be used to pin down

It is used to pin down CapQB=CapPY.