I am trying to modify a Iacoviello (2005, 2010) type of DSGE model with a housing market allowing for substitution between rental and owner-occupied housing services.
DSGE.mod (4.1 KB)
I have calculated the FOC and written them in Dynare. However, I am challenged by how to calculate the initial steady state (SS) values. Do I simply just calculate the steady state values by hand by dropping time subscript in the FOCs and hereafter solve for each variable in the SS until I can express the variables as a function of only parameters?
Appreciate the help - thanks!