Log-Linearized Sticky Wages -- indeterminacy

General DSGE Modeling Replication Attempts
1

I am trying to put Eric Sims’ log-linearized sticky price and sticky wage model directly into dynare (p.30). The regular version runs fine but I get an indeterminacy error using the log-linearized version directly

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Is there any reason this wouldn’t work? I walked away from it for a few weeks and came back and still can’t find a typo, though I am happy to upload my code. Parameterization found on p.19. I set all initial values to 0.

2

I would need to see the codes.

3

Got it – thanks so much for all your help to me and others on this forum over the years!

loglin.mod (869 Bytes)
param_dnk_wage.m (315 Bytes)

4

Is the inflation feedback in the Taylor rule correct? It seems too low.

5

That was exactly it! I had played around with it and restored it incorrectly – ES set it at .3. Thank you!