Hi,

I’m developing a NK Model with banks and CBDC. But my model apparently does not have a SS and a has a bunch of residuals. I have rechecked the parameter values and calculated steady state values but I’m not sure what I’m doing wrong

The code is given below:

```
var cs cb ms mb rs rb ws wb ls lb f q d id iq y x ir l i o;
varexo eps_e;
parameters BETAS, BETAB, BETAF, PHI, GAMMA, ETA, KTILDE, XSS, RHOS, RHOP, RHOY, CHI, SIGMA, DELTA;
BETAS = 0.98 ; %discount factor, savers
BETAB = 0.95; %discount factor, borrowers
BETAF = 0.95; %discount factor, banks
ETA = 2.7 ; %labour supply elasticity
PHI = 0.1; %share of savers in labour market
CHI = 0.01791; %preference for money
SIGMA = 0.2; %preference for cbdc
KTILDE = 0.088;
XSS = 1.1;
GAMMA = 0.1925; %statutory liquidity ratio
RHOS = 0.8; %money growth smoothening
RHOP = 1.2 ; %weight on inflation
RHOY = 0.5 ; %weight on output gap
DELTA = 0.75; %shock persistance
STDERR_AE = 0.0029 ;
model;
%SAVERS
1/cs = BETAS*(ir/(i(+1)*cs(+1))) ; %euler equation
1/cs = (CHI/ms) + BETAS*(1/(i(+1)*cs(+1))); % money demand
1/cs = (SIGMA/rs) + BETAS*(1/(i(+1)*cs(+1))); %cbdc demand
ws = (ls^ETA)*cs; %labour supply
%BORROWERS
cb = (wb*lb) + (mb(-1)/i) + (rb(-1)/i) + q - mb - rb - (iq(-1)*q(-1)); %budget constraint
1/cb = (CHI/mb) + BETAB*(1/(i(+1)*cb(+1))); %money demand
1/cb = (SIGMA/rb) + BETAB*(1/(i(+1)*cb(+1))); %cbdc demand
wb = (lb^ETA)*cb ; %labour demand
%BANK
1/q = BETAB*(iq/cb(+1)) - 1/cb; %loan demand
1/d = 1/cs - BETAS*(id/cs(+1)); %deposit supply
iq = (1/BETAF)*(f(+1)/f); %optimal lending rate
id = (1/BETAF)*(1 - GAMMA)*(f(+1)/f); %optimal deposit rate
%FIRMS
y=PHI*ls + (1 - PHI)*lb; %production function
ws = (PHI*y)/(ls*x); %labour demand, savers
wb = ((1 - PHI)*y)/(lb*x); %labour demand, borrowers
i = BETAS*i(+1) - KTILDE*(x-log(XSS)) ;
%MARKET CLEARING OR AGGREGATION
y = cs + cb; %goods market
q = d; %deposits market
l = ls + lb; %labour market aggregation
%MONETARY POLICY
ir = RHOS*ir(-1) + (1-RHOS)*(1+RHOP)*i + (1-RHOS)*RHOY*y + o; %monetary policy rule
o = DELTA*o(-1) + eps_e; %shock process
end ;
initval;
cs = 1;
ms = 1;
rs = 1;
ls = 1;
ws = 1;
cb = 1;
mb = 1;
rb = 1;
lb = 1;
wb = 1;
f = 1;
q = 1;
id = 0.85;
iq = 1.05;
d = 1;
y = 2;
x = 1;
l = 2;
ir = 1.02;
i = 1;
o = 0;
end;
resid;
steady ;
shocks;
var eps_e; stderr 100*STDERR_AE; end;
stoch_simul(dr_algo=0,order=1,irf=20) ;
```