Dear all, I want to follow Iacoviello (2005)model in the paper(House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle). But the model has problem, so I decompose the model. In the basic model, there are households, entrepreneurs and monetary authorities.

X be the relative price of wholesale goods，so X is the gross markup of retail goods over wholesale goods. When there is no gross markup in the model, there is no problem. However , when thegross markup was added, there was a problem. I have checked the calculation of the steady state carefully. I’m sure there is no question. I can’t find the problem in the model，can anybody help me?

Without_relativeprice.mod (2.9 KB)

WithEntrepreneur.mod (3.2 KB)