Guerrieri, Iacoviello and Minetti model (2012) steady state

Hello,

I am trying to solve a simplified version of the Guerrieri, Iacoviello and Minetti model (2012). With respect to the main model I eliminated the government side and I added a certain degree of illiquidity in the bond market.

When I bring the model to dynare I get the following error message
STEADY: numerical initial values incompatible with the following equations
10

??? Error using ==> dynare_solve at 94
exiting …

Error in ==> steady_ at 120
[oo_.steady_state,check] = dynare_solve([M_.fname ‘_static’],…

Error in ==> steady at 54
steady_;

Error in ==> banking20120919 at 130
steady;

Error in ==> dynare at 120
evalin(‘base’,fname) ;

I computed the steady state using pen and paper several times, but I cannot find the error.

When I include the “resid;” option I get that the 1, 3 and the 10 equation in my model have big residuals. The problem is that I do not see how this is possible as it seems to me straightforward that for equations 1 and 3 at least the residual should be zero.

Is there any way I can fix it or is the model ill constructed?

Many thanks in advance for your help

Enrico
banking20120919.mod (1.58 KB)

You have some syntax problem. You have

steady;
initval;
.
.
.
end;

But the correct syntax is

initval;
.
.
.
end;
steady;

Hi

I actually realised there is a mistake in the model and I had to change the code completely. It works now.

Many thanks

Enrico

Could you post your (working) code here. I am messing with similar models so I would appreciate it. Thanks