I am trying to get the IRF for a 5 period 0LG model in which agents work for the first 3 periods, receiving a wage and then retire for 2 when they get their pensions. I am having trouble finding the steady state in dynare as it tells me it cant find it. Since I’ve programmed the model in matlab I already know the s.s. values which are my initial guesses. More specifically, for a replacement rate of 0.3 for the pensions (pensions = 0.3*wage), which is what I want to model, it can’t find a steady state. In case I set the replacement rate to 0, the code gets the correct steady state for some reason I can’t understand. I have uploaded the mod file in case anyone has any suggestions.
Thanks a lot!OLG1_5per_pens.mod (2.8 KB)