Error in print_info (line 32) Impossible to find the steady state (the sum of square residuals of the static equations is 1159591301946303.2500)

Steady state
1

Dear professor:

When the parameter afa_0 = 0.97, my code can run. But if I set afa_0 = 0.5, it displays the warning:
error print_info (line 32)
Impossible to find the steady state (the sum of square residuals of the static equations is 1159591301946303.2500). Either the
model doesn’t have a steady state, there are an infinity of steady states, or the guess values are too far from the solution
error steady (line 102)
print_info(info,options_.noprint, options_);
error cbdc1.driver (line 607)
steady;
error dynare (line 293)
evalin(‘base’,[fname ‘.driver’]) ;

I can’t find out the mistake. Could you help me? Thank you very much!
cbdc1.mod (3.0 KB)

2

Your second equation returns a huge residual in that case:

Residuals of the static equations:

Equation number 1 : 0 : 1
Equation number 2 : 121.309 : lamda

That should provide a clue.

3

Thank you for your answer. But why I set afa_0 = 0.97, the code is able to run? And the residual of lamda is also huge.

4

Try lowering the parameter in steps. You will see that you go from a running model through BK violations to not finding a steady state with gigantic residuals for some equations. Thus, are you sure the parameter value is feasible?

5

Thank you for your answer.