Dear Madams and Sirs,

Accompanying with Matlab, I downloaded the Dynare and ran a dynare program, as following P.S. A., produced by Barillas, Colacito and Kitao (2007), which did calibration of the two-country production model in Kim and Kim (2003). Barillas, Colacito and Kitao (2007) offered the Dynare practicing .mod file for reader. I ran with the .mod file, but the Dynare responsed to me with a syntax error, as following P.S. B., at line 44. 12-18, i.e. “stoch_simul(dr_algo=0,periods=200).” As I know, the “dr_algo” is a reserve word for the statement of stoch_simul. Why did the syntax error happen to me? How should I sort out the problem?

I appreciate your help.

Best regards,

Dou-Ming Su (Mr.)

P.S.

A.

periods 200;

var c1 c2 k1 k2 a1 a2 y1 y2;

varexo e1 e2;

parameters gamma delta alpha beta rho;

gamma=2;

delta=.05;

alpha=.4;

beta=.98;

rho=.85;

model;

c1=c2;

exp(c1)^(-gamma) = beta*exp(c1(+1))^(-gamma)*(alpha*exp(a1(+1)) exp(k1)^(alpha-1)+1-delta);*(alpha

exp(c2)^(-gamma) = betaexp(c2(+1))^(-gamma)

*exp(a2(+1))*(1-delta) = exp(a1)

*exp(k2)^(alpha-1)+1-delta);*

exp(c1)+exp(c2)+exp(k1)-exp(k1(-1))(1-delta)+exp(k2)-exp(k2(-1))exp(c1)+exp(c2)+exp(k1)-exp(k1(-1))

*exp(k1(-1))^alpha+exp(a2)*

a2=rhoa2(-1)+e2;

*exp(k2(-1))^alpha;*

a1=rhoa1(-1)+e1;a1=rho

a2=rho

exp(y1)=exp(a1)*exp(k1(-1))^alpha;

exp(y2)=exp(a2)*exp(k2(-1))^alpha;

end;

initval;

y1=1.1;

y2=1.1;

k1=2.8;

k2=2.8;

c1=.8;

c2=.8;

a1=0;

a2=0;

e1=0;

e2=0;

end;

shocks;

var e1; stderr .08;

var e2; stderr .08;

end;

steady;

stoch_simul(dr_algo=0,periods=200);

datatomfile(‘simu2’,]);

B.

dynare TwocountryApprox

Configuring Dynare …

[mex] Generalized QZ.

[mex] Sylvester equation solution.

[mex] Kronecker products.

[mex] Sparse kronecker products.

Starting Dynare …

Starting preprocessing of the model file …

ERROR: TwocountryApprox.mod:44.12-18: syntax error, unexpected NAME

??? Error using ==> dynare at 96

DYNARE: preprocessing failed