Issue with steady state


I am working on an extension of Gertler’s (1999) model, which is related to my earlier post, but now my model is more complete. I worked first on the demographics part of the model, which I calibrate to match the data. However, when I use those parameters in the code with the complete model, Dynare reports it cannot find the steady state. The code works if I set the steady state values of transition probabilities p^y and p^m to be lower, but then the simulated MY and RM ratios from my model cannot match the data well. Do you perhaps have another suggestion how I could resolve this without changing the calibration of the demographics part of the model? Attached are the codes and model equations.
Model.pdf (1.0 MB)
DEMvsINE.m (3.0 KB)
DEMvsINE.mod (3.8 KB)

It seems like you need to improve your starting values or, even better, provide an analytical steady state. For models of that complexity, numerical steady state finding often does not work.

Thank you!