i need some help. I was trying to replicate the Hasnu dalgic ‘s paper Financial dollarization in emerging economies: an insurance arrangement, and I didnt get the steady state. In the solution, Dalgic wrote that he used a third order approximation and I did it in Dynare but I cant get that. When I run the code, Dynare tell me that it is a problem with a initial values. I would thank that you can help me with the code because I have to send my paper until 1st of december.
One issue are initial values. pi=0 is infeasible as it results in a division by 0. But for a model of that type, you almost surely need to approach the steady state analytically.
In theory, that is possible. But that requires the good initial values and absolutely no mistakes in the model setup. For complicated models like the one you are dealing with, that is unlikely. In that case, computing the steady state analytically provides an important cross-check.
How can I get the steady state of the financial frictions? I could get the steady state of the model, excepto for the entrepreneur decision. Can you help me with that, please?
This is the problem that I am facing. I think that I can solve this in Matlab, not in Dynare. There are many functions that doesnt have steady state. How can I do that?
