Finding steady state

Dynare help (legacy posts)
1

hi , I would like to create a model about climate economics.and I wrote codes as below.But they are not working properly and system gives error as below.
Appreciate if someone can help me. thanks

var L A k c q omega Tat;
varexo e;

parameters alfa ro gamma sigmak w gl ga psi sigmae ;

alfa=0.45;
ro=0.015;
gamma=0.33;
sigmak=0.1;
sigmae=0.01;
w=1.08;
psi=0.003;
gl=0.134;
ga=0.016;

model;

Lc^(-alfa)=((1/(1+ro))c(+1)^(-alfa)((gammaA(+1)k^(gamma-1))/(1+omega))-sigmak);
q=(Ak^gamma)/(1+omega);
k=((A)k(-1)^(gamma))/(1+omega)-c-sigmakk(-1);
L=L(-1)(1+gl);
A=A(-1)(1+ga);
omega=psiexp(Tat)+psiexp(Tat)^2;
Tat=w*Tat(-1)+e;
end;

initval;

L=6838;
k=19.74;
q=63.69;
c=44.34;
A=3.8;
omega=0.9;
end;

shocks;
var e=sigmae^2;
end;

steady;
stoch_simul(hp_filter=1600,order=1,irf=40);

system gives error as follow;
Residuals of the static equations:

Equation number 1 : 0.1
Equation number 2 : 63.69
Equation number 3 : 0
Equation number 4 : 0
Equation number 5 : 0
Equation number 6 : 0
Equation number 7 : 0

Error using print_info (line 74)
Impossible to find the steady state. 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 in steady (line 92)
print_info(info,options_.noprint, options_);

Error in climate (line 157)
steady;

Error in dynare (line 180)
evalin(‘base’,fname) ;

2

The way you set up your model with trends in L and A there exists no steady state. L and A will go to infinity.

3

Thank you very much indeed.

4

Hi,
I am a newbie in DYNARE. I need help to clarify a basic question about the how to compute steady state.
Normally when we solve a DSGE model (RBC/N.Keynesian), is the steady state value usually computed by DYNARE or do we need to compute it using paper & pencil first & later we feed the value to the DYNARE to the job?
Is there any good example that I can refer to?

Thanks very much in advance
lin

5

For smaller models, nonlinear solvers often work reasonably well. For bigger models and estimation, pencil and paper is often preferable. See also Remark 15 (initval vs. steady_state_model vs. steadystate-file) in Pfeifer(2013): “A Guide to Specifying Observation Equations for the Estimation of DSGE Models” sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf.