Issue with finding the steady state

Steady state
1

Hello,

I’ve been trying to estimate a simple extension of Gertler’s (1999) model with individuals going through three stages of life, rather than two. However, I have an issue with finding the steady state and I could not figure out what the problem is. I would appreciate any help.

ModelN.m (3.0 KB)

ModelN.mod (4.0 KB)

model.pdf (140.0 KB)

2

Equation 29 has a large residual. You start debugging there.

3

Thank you! I tried simplifying the model, and estimating it without the production side but I still get the error: The Jacobian of the dynamic model contains Inf. Not sure if the issue could be with the calibration of one of the transition probabilities (p_y, p_m, n and s).

Model.mod (3.1 KB)

Model.m (2.7 KB)

4

Your steady state makes no sense. You have N_m=0, but in the equation

A_m = p_m(+1)*((N_m(-1)/N_m)*R(-1)*A_m(-1)+ xi_m*w-C_m)+((1-p_y(+1))/p_y(+1))*A_y*MY^(-1);

you divide by N_m

5

Thanks a lot for the help! I resolved it.