Issue with the steady state


I’ve been trying to estimate a very simple model but I have the issue with the steady state. It says: “Impossible to find the steady state. Either the model doesn’t have a steady state, there are an infinity of steady states, or the guess values are too far from the solution”.

However, if I write the complementary slackness conditions for the constraints (wage rigidity and borrowing constraint) instead of assuming they bind, then the code works. I can’t figure out what I am doing wrong so would appreciate any help.

m2.mod (2.5 KB)

Hi, looking at the residuals of your model, you obviously made a mistake while calculating your steady-state. You should check your calculation again.

Thank you for your help! I rechecked, but I do not see the mistake in calculations.

It seems your value for n is not consistent with most model equations. Did you thoroughly check the bracketing?

Yes, I rechecked but still can’t figure out what the issue is. Thank you

Then you can only simplify the model.

Ok, will try, thanks again!