Impossible to find the steady state (the sum of square residuals of the static equations is 146.1718). 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

Hi, i running a small DSGE model on tax exemption and monetary policy rule, and the dynare cannot find it stead-state. I have checks and no idea how to identify the problem.

Attached .mod file for your references.

Tax Ex_130624.mod (2.5 KB)

My questions
(1) Does the modelling wrongly modelled?
(2) Does the initial values is correct?
(3) Why the steady-state is impossible to find?


How did you obtain the guesses for your steady state? Did you guess them based on economic logic or did you calculate them based on the static equilibrium conditions that define the steady state?

Check your model. TFP a has steady state 0 in your model, which is inconsistent with the production function. It should be

log(a) = rho_a * log(a(-1)) + eps_a;

I calculated based on the matlab iteration process to get the initial values. OR do i need to compute them manually and provide plausible starting values?