My question is not new. I come up with the Euler Equation. Equation (2) in dynare file where I take the first derivative with respect to N_t (labor).
The equation cannot be wrong because it is quite popular but anytime I put this equation in the model, the steady state differ from zero and I do not know why.
I think it is better for me to learn from this problem rather quit using this equation or something.
Can anyone give me some explanation for this situation? HOW I can know what is the problem and HOW I can solve this?
Here is the file test8.mod (9.9 KB)
Thank you so much