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)