Good day,

I am studying ways to find the steady state in DSGE models, but I’m having difficulty finding the indicated literature. Could you help me?

best,

Celso Costa

Good day,

I am studying ways to find the steady state in DSGE models, but I’m having difficulty finding the indicated literature. Could you help me?

best,

Celso Costa

There are two ways to finding steady state either;

- you compute it by hand, or
- use the command

steady;

check;

Unfortunately, there is no literature on this that I am aware of. The thing is that after dropping all time subscripts, you simply have to solve a system of nonlinear equations. There are some tricks you get to know with some practice, but I am not sure anyone has ever really written them down.

Thank you.

I have a procedure to find the SS. But I whould like to know if there is a theory about it.

Best regards,

Celso

What do you mean with “Theory”? You are solving a nonlinear equation system. Depending on how the equations look like, theory might tell you whether there exists a unique steady state. For example, in the Solow model, the theory tells us there are two steady states: the regular one and the trivial one at 0.

I think something like your example (Solow). I will be to think about it.

Thank you.