Log form steady state residual

Steady state
1

Here is my mod file
di_no.mod (3.5 KB)
, which can be run successfully on dynare. But I found that the residuals of those equations defining variable’s log form are so huge that I think it should not be a steady state. \
Thanks in advance!

Residuals of the static equations:

Equation number 1 : 0 : 1
Equation number 2 : 0 : lntheta_d
Equation number 3 : 1.1763e-07 : 3
Equation number 4 : 0 : 4
Equation number 5 : 0 : q
Equation number 6 : 0 : 6
Equation number 7 : 0 : y
Equation number 8 : 0 : lntheta_f
Equation number 9 : 0 : A
Equation number 10 : 0 : lna
Equation number 11 : 2.6025e-07 : dx
Equation number 12 : 0 : x
Equation number 13 : 0 : e
Equation number 14 : 0 : rk
Equation number 15 : 8.3061e-08 : w
Equation number 16 : 0 : 16
Equation number 17 : 0 : g
Equation number 18 : 0 : lng
Equation number 19 : 0 : 19
Equation number 20 : 0 : 20
Equation number 21 : 0 : 21
Equation number 22 : 0 : 22
Equation number 23 : 0 : 23
Equation number 24 : 0 : 24
Equation number 25 : 0 : lny
Equation number 26 : 0 : lni
Equation number 27 : 0 : lnc
Equation number 28 : -0.45554 : lnk
Equation number 29 : 0.98154 : lnh
Equation number 30 : -0.01005 : lnr
Equation number 31 : 0 : lnpi
Equation number 32 : -0.41524 : lne

2

This problem is fixed! The reason is that I forgot to give these log form variable initial value. But here is a new question: why the code can be run successfully ? Moreover, I noticed that the residual is the log value of these variables in steady state.

3

Hi Max,

The residuals, whose display is triggered by the resid command, are calculated for the values given in the initval block. These residuals will be non-zero if the values given in the initval block are not the steady state. After that, when you call the steady command, Dynare acknowledges that the initial guess is not the steady state and runs a nonlinear solver to find the zero of the static equations. If the non-linear solver is successful (as in your case), Dynare can proceed and solve the approximated model.

Best,
Stéphane.