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)
Equation 29 has a large residual. You start debugging there.
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)
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
Thanks a lot for the help! I resolved it.