Investment adjustment cost

Dynare contributions and examples
1

Hi,
I am trying to build rbc model with investment adjustment cost. First, I stationarized the model and then I found steady states. When i run the model, the residuals does not seem nice and now i am trying to fix them. I think that I got problem in equation 9 and 13 since there is a mistake in equation 7. i do not know how to solve my problem. If anyone gives me some ideas, it would be great. best

Residuals of the static equations:

Equation number 1 : 0
Equation number 2 : 0
Equation number 3 : 0
Equation number 4 : 0
Equation number 5 : 0
Equation number 6 : 0
Equation number 7 : 1.9142
Equation number 8 : 0
Equation number 9 : -0.0087875
Equation number 10 : 0
Equation number 11 : 0
Equation number 12 : 0
Equation number 13 : 0.019839
Equation number 14 : 0
Equation number 15 : 0
Equation number 16 : 0
Equation number 17 : 0
Equation number 18 : 0
Equation number 19 : 0
Equation number 20 : 0
Equation number 21 : 0
basic5.mod (2.19 KB)

2

Sit down and compute the steady state analytically. Any equation that does not have 0 residuals either has a mistake or your steady state computation for the variables in that equation is wrong.

3

I do not know if this is useful. A simple RBC with investment adjustment costs can be dound in Torres book. The code can be downloaded from http://webpersonal.uma.es/de/jtorres/jtorres.htm. At bottom of page you will find model4.mod (Modelo con costes de ajuste en la inversión). Unfortunately it is written in Spanish, but the code speaks for itself. http://webpersonal.uma.es/de/jtorres/pdf/model4.mod