Hello everyone,

First of all, I am not sure if I need to include this topic in “Stochastic simulations” category, as the problem occurs only when I am using stoch_simul command, but I think it is more natural to list the topic in “Steady state” category.

Secondly, for the MATLAB steadystate files to be executed properly, the elder version of Dynare is required. I “inherited” the syntax of these steady state files from a former colleague of mine, and these files do not run properly under the newer Dynare releases. I am using Dynare release 4.5.6 for this reason. If someone could advice me on how to change the steadystate files so that they can run under the newer Dynare releases, I would appreciate it a lot. However, this is not my main concern at the moment.

Here is my problem. Single-agent setup of my model works well, and I manage to find the steady state using Dynare. I am attaching the mod file and MATLAB steady state for your reference here.

V1.mod (11.9 KB)

V1_steadystate.m (7.0 KB)

However, I am experiencing difficultines in the setup with 2 agents. Setup 2a has identical agents and setup 2b implies heterogenous agents.

V2a.mod (13.2 KB)

V2a_steadystate.m (9.2 KB)

I will upload mod and MATLAB steady state file for 2b in the separate message as I have limit of max 5 files to be uploaded (as a new user in the forum).

For both 2a and 2b I manage to find the steady-state values of the model variables using the corresponding MATLAB steady-state files. However, once I attempt to run stoch_simul command in Dynare mod file, I got the error message that BK conditions are not satisfied.

My intuition tells me that there are some mistakes that I made in the model equations after I added the second agent to the economy. Unfortunately, I could not spot them. Any help would be appreciated!