Hi,
I am totally new to Dynare. I am trying to run the code for the Long-run risk model (Bansal and Yaron 2004) posted on Tom Sargent webpage (http://www.tomsargent.com/new_papers.html) for '‘Practicing Dynare". My issue is it seems like `dr_algo’ is not supported in the current version. Without dr_algo, however, the Dynare couldn’t find a steady-state. I was trying to find which code replaces dr_algo, but I couldn’t find. Can someone help me? Following is the code.
Best,
Kevin
periods 500;
var dc, dd, v_c, v_d, x; varexo e_c, e_x, e_d;
parameters DELTA THETA PSI MU_C MU_D RHO_X LAMBDA_DX;
DELTA=.99;
PSI=1.5;
THETA=(1-7.5)/(1-1/PSI);
MU_C=0.0015;
MU_D=0.0015;
RHO_X=.979;
LAMBDA_DX=3;
model;
v_c = DELTA^THETA *exp((-THETA/PSI)*dc(+1)+(THETA-1)*log((1+v_c(+1))exp(dc(+1))/v_c)) (1+v_c(+1))*exp(dc(+1)); %
v_d = DELTA^THETA * exp((-THETA/PSI)*dc(+1) + (THETA-1)log((1+v_c(+1))exp(dc(+1))/v_c) ) * (1+v_d(+1))exp(dd(+1)); %
dc = MU_C + x(-1) + e_c;
dd = MU_D + LAMBDA_DXx(-1) + e_d; %
x = RHO_X * x(-1) + e_x;
end;
initval;
v_c=15;
v_d=15;
dc=MU_C;
dd=MU_D;
x=0;
e_c=0;
e_x=0;
e_d=0;
end;
shocks;
var e_c;
stderr .0078;
var e_x;
stderr .0078.044;%
var e_d;
stderr .00784.5;
end;
steady(solve_algo=0); check;
stoch_simul(dr_algo=1, order=1, periods=1000, irf=30);