Hi. I am trying to reproduce the equilibrium conditions of a basic MIU model using Dynare in MATLAB, but I cannot understand what I am doing wrong. I guess it is something related with the specification of equilibrium conditions.
I reproduce my code next:
% Endogenous variables:
var c m b k l r w y I i pi M p;
% Parameters:
parameters g1 g2 alpha beta delta tao;
g1 = 0.2;
g2 = 0.3;
alpha = 0.35;
beta = 0.99;
delta = 0.04;
tao = 0.2;
% Modelo, condiciones de equilibrio:
model;
(-g2*(1/(1-l)))/(g1*(1/c)) = w; % Leisure - Consuption equilibrium condition
g1*(1/c)) = beta*(g1*(1/c(+1)))*(1+r(+1)-delta); % Intertemporal consumption equilibrium condition
(1+i)/(1+pi(+1)) = (1+r(+1)-delta); % Fisher relationship
((1-g1-g2)*(1/m))/(g1*(1/c)) = i/(1+i); % Money - Consuption equilibrium condition
alpha*(k(-1)^(alpha-1))*(l^(1-alpha)) = w; % Wage
(k(-1)^(alpha))*(1-alpha)*(l^(-alpha)) = r; % Return on capital
y = (k(-1)^(alpha))*(l^(1-alpha)); % Production function
k = (1-delta)*k(-1) + I; % Capital movement law
y = c + I; % Goods market clearing condition
M = (1+tao)*M(-1); % Nominal money balances
1+pi = (m/m(-1))*(1+tao); % Inflation
m = M/p; % Real money balances
b = 0; % Bonds market clearing condition
end;
initval;
y = 1;
c = 0.9;
I = 0.1;
k = 10;
b = 0;
m = 0.1;
r = 0.3;
w = 0.7;
i = 0.1;
pi = 1;
M=1;
p= 1;
l=10;
end;
steady;
check;
stoch_simul;
When I run dynare I get:
Configuring Dynare ...
[mex] Generalized QZ.
[mex] Sylvester equation solution.
[mex] Kronecker products.
[mex] Sparse kronecker products.
[mex] Local state space iteration (second order).
[mex] Bytecode evaluation.
[mex] k-order perturbation solver.
[mex] k-order solution simulation.
[mex] Quasi Monte-Carlo sequence (Sobol).
[mex] Markov Switching SBVAR.
Using 64-bit preprocessor
Starting Dynare (version 4.5.4).
Starting preprocessing of the model file ...
Found 13 equation(s).
Evaluating expressions...done
Computing static model derivatives:
- order 1
Computing dynamic model derivatives:
- order 1
- order 2
Processing outputs ...
done
Preprocessing completed.
Residuals of the static equations:
Equation number 1 : -3.0199e-06
Equation number 2 : -3.8334e-07
Equation number 3 : 0
Equation number 4 : 3.3552e-06
Equation number 5 : 4.2762e-06
Equation number 6 : -3.2339e-07
Equation number 7 : 2.7008e-07
Equation number 8 : 0
Equation number 9 : 0
Equation number 10 : 0
Equation number 11 : 0
Equation number 12 : 1152290.4146
Equation number 13 : 0
Error using print_info (line 83)
Impossible to find the steady state. Either the model doesn't have a steady state, there are an
infinity of steady states, or the guess values are too far from the solution
Error in steady (line 104)
print_info(info,options_.noprint, options_);
Error in a (line 181)
steady;
Error in dynare (line 223)
evalin('base',fname) ;
I will be really grateful if you help me.
Bests,
Martin