M file in dynare model block

Steady state
1

Dear all,

I have an equation in the model block of dynare but because of the non-linearity there is no explicit solution for the variable. Basically, I have the same variable in the both side of the equation, which the variable I need to have a solution.

I am not sure if that makes sense, but Can I write an m. file for this equation using fzero matlab command which gives numeric values for the variable and include this m file into the model block?

I am not sure if this idea is applicable

Best

2

Dear Fery,

I am not sure I understand your problem here. It is perfectly legal to have the same variable on both sides of an equation. When you will simulate the model, you will obtain a solution for the variable (obviously this solution will depend on how you approximate the model).

If you have a matlab function to compute a variable (or a parameter) you can use an external function in the model block (this is described in the reference manual here.

Best,
Stéphane.

3

Dear Stepan,

Thank you for the answer. I built the model in a way labor shows up as below. I thought that might be the problem why model is not working.

L=((1-alpha)*(h1)*Z/((a1-a0)*CW+S))^1/alpha*K

where

S=gamma/2*(L/Lss-1)^2

When I run the model it shows that I have problem for three equation out of 16 equation including L.

Maybe that means, even if I have steady state vaule of L, the way it is used in the dynare model block gives some problems ?

Best Regards

4

What exactly is the error message you are facing?

5

Hello Dr Pfeifer
When I run the model it can not compute the steay state, there are big residuals for 3 equations, for others zero. The biggest non zero residual is related to the L, I still can not see What the problem this equation might have.

Best

6

Replacing that equation to an equivalent one will not solve your steady state problems. You should try to compute the steady state analytically.