Hello, I have set initial values for variables, according to the rule I describe below. I get the error message
“error: The steady state has NaNs or Inf.”
My sample includes data for Slovenia, Austria and Italy in 1991-2019. All estimates are on the annual basis.
x, a, v = 1, x is a shock to marginal efficiency of investment, a is IS shock and e is a money demand shock, values are assumed by Röhe (2012).
z, v = 0, z is a technological shock and v is a monetary policy shock. Values are assumed by Röhe (2012).
y = 26933 is the GDP p.c., average of the sample data for 3 countries in 28 years,
k=684000 is households’ capital supply, the data is average firm’s debt to depositary institutions for Slovenia 1991-2019
in=1946.8 are goods that are purchased by households and not consumed or investment, the data is the sample average for saving as a product of salary and savings rate
c=12567.3 is the consumption, the estimate is the sample average
d=2 is the nominal dividend, the estimate is average yield at DAX in 2020
m=735.1 is money brought from previous time period, the estimate is the sample average for money aggregate M3
w=14637.4 is the nominal wage, the estimate is the sample average
h=1834 is the number of hours worked, the estimate is average for Slovenia 1991-2019
r =8.8 is the gross nominal interest rate between time periods, the esitmate is the sample average
q=0.09 is the nominal rental rate for capital, the estimate is for the US in 2020, computed as sum of the equity risk premium (6.0 %) and the reaffirmed normalized risk-free rate (3.0 %)
n=14.7 is the GDP per hours worked (y/h)
*tau=0.0068 is the M3 growth rate, the estimate 0.68 % is the sample average
lambd=-0.41 is the marginal utility of additional euro of profits, estimated with the marginal utility of income, this estimate is for the US in 1991-1992
*ksi=0 this variable has no explicit meaning in Röhe (2012), it’s from firms’ Lagrangian optimization, the estimate I left 0
pi=79.1 is the inflation rate, the estimate is the sample average Model.mod (1.9 KB)