Help with my steady state

Steady state
1

Hello,

This is my first time using Dynare 6.1, and I am trying to solve for the steady state of a model. I have provided Dynare with a MATLAB file that computes the steady state and parameters. However, I keep encountering an error that says: “MODEL_DIAGNOSTICS: The steady state cannot be computed.”

I would greatly appreciate any help in getting this model to run. My ultimate goal is to estimate some of the parameters, but I would like to ensure that the model runs correctly with the current parameters before moving on to the estimation process.

I have attached the MATLAB file that computes the steady state, labeled as “calibration,” along with the .mod file.

I look forward to your assistance.

calibration.m (10.9 KB)
model1.mod (13.0 KB)
model1_steadystate.m (1.4 KB)
paramfile_model1.m (82 Bytes)

2

There is only one equation with residuals:

Equation number  12: MU_H         :       0.003650

Focus on that one.

3

Thank you for the reply.

I noticed that. Is there a resaon why dynare still cannot compute the steady state even after i increased the tolerance to a value larger than the residual on the MU_H equation?

4

I would need to see the implementation.

5

In the mod file, I set (options_.dynatol.f = 0.12;) while the current value of the residual on MU_H is (Equation number 12: MU_H = 0.003650).

6

The relevant option should be options_.solve_tolf.

7

Thank you. That worked.

8

I’ve encountered a rank condition issue in my model. Currently, I have 36 eigenvalues larger than 1 in modulus but only 35 forward-looking variables. Could you assist me in identifying where the problem might be? I’m wondering if the issue could be due to incorrect timing in my equations, or if there might be another underlying cause.

9

Most often it’s a timing issue. I can only give you the standard advice. Start from a simpler version of the model that works.

10

Okay. I’ll do that.