Hello,
I am very new to Dynare and I am replicating a two-sector RBC model by Arellano, Bulir, Lane and Lipschitz (2009), I have attached their paper. My code was working without k, kdt and kdn which are essentially from equation 8 in the paper. The error message says “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”. I wonder where I did wrong?
Below is the model block:
model;
c = (omegact^(-mu)+(1-omega)cn^(-mu))^(-1/mu);
pn = ((1-omega)/omega)(cn/ct)^(-(1+neta));
pc = (omega^(1/(1+neta))+(1-omega)(1/(1+neta))pn^(neta/(1+neta)))^((1+neta)/neta);
k = (kt^(-vega)+kn^(-vega))^(-1/vega);
kdt = (kt^(-vega-1))(kt^-vega+kn^-vega)^((-1/vega)-1);
kdn = (kn^(-vega-1))(kt^-vega+kn^-vega)^((-1/vega)-1);
(c^(-sigma)/pc) = beta(c(+1)^(-sigma)/pc(+1))(Atexp(eps)alpha(kt(+1)/labt(+1))^(alpha-1)+1-delta)/kdt(+1);
Atexp(eps)(1-alpha)(kt/labt)^alpha = pnAnexp(eps)(1-neta)(kn/labn)^neta;
(Atexp(eps)alpha(kt/labt)^(alpha-1))/kdt = pn*(Anexp(eps)neta(kn/labn)^(neta-1))/kdn;
ct(-1)+(k)-(1-delta)(k(-1))=Atexp(eps)kt(-1)^alphalabt(-1)^(1-alpha);
cn = Atexp(eps)kn^netalabn^(1-neta);
labn+labt = 1;
eps = rhoeps(-1)+e;
k = i(-1)+(1-delta)k(-1);
y = Atexp(eps)kt^alphalabt^(1-alpha)+pnAt*exp(eps)kn^netalabn^(1-neta);
end;
Bulir (2009).pdf (741 KB)
rbc6.mod (2.64 KB)