I have been trying to replicate all results in Jermann and Quadrini (2012) using Prof. Pfeifer’s code. It’s extremely helpful and I am able to get results in baseline RBC model. I have a problem when I try to add investment adjustment cost to test its sensitivity as in the paper. Technically, all I need to do is to introduce additional variable, Tobin’s q, three new parameters governing adjustment cost and modify the first order conditions. I think I might have made mistake when modifying the m file that calculates steady state values which is also from Prof. Pfeifer’s website.
The warning message is
"Warning: Some of the parameters have no value (alppha, const, pho1) when using steady. If these parameters are not initialized in a steadystate file or a
steady_state_model-block, Dynare may not be able to solve the model… "[Jermann_Quadrini_2012_RBC_adj_cost_steadystate.m (3.5 KB)
Jermann_Quadrini_2012_RBC_adj_cost.mod (20.0 KB)
I am new to use Dynare and never build a steadystate m.file before. Any comment or suggestion would be appreciated.