Issue with steady state

Steady state
1

Hello,

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)

2

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.

3

Thank you!