Good Morning. I’m running Rubart (2006), and I still have problems with the steady state computation. I don’t understand wheter my initial guesses are so far from the real ones to make impossible for dynare to calculate a steady state, or if there is something totally wrong in the structure of the model (that should be the replication of the one in the paper). One of the most critical points for me is the presence of the lagrange multiplier (that I call here gamma). I’m not sure I should include it in the model, but in the f.o.c of the paper is present. In the code I attach I’m treating it as a constant, for the moment, trying to assign it a plausible value. including it or not doesn’t make any difference in my results, and the manual calculation of the steady state value for all the variables, very long and complicated since there are many variables and equations that are not linear, gives me results that dynare doesn’t like.

In particular p_s, p_u, q_s, and q_u should be probabilities, but each value given to s_s and s_u makes impossible to make them all smaller than one at the same time.

I don’t really know what to do. If someone has some suggestions about

1 how to simplify the manual calculation of the steady state

2 which ones could be the possible sources of mistake

the help will be extremely appreciated and important.

thank you

provasenzagamma.mod (4.6 KB)