Dear Johannes Pfeifer & All,
I am trying to replicate the results of Melina & Villa, “Fiscal Policy & Lending Relationships”. My model has 38 equations. The paper had listed all equilibrium conditions, the steady state equations and almost all parameter values (attached). So in a way the task at hand was only to write the equations and replicate results.
The only values assumed by my professor were:
y = 1.01 - output
rn = 1 - nominal interest rate
q = 1 - tobin’s q
To my best knowledge, the model has no error’s. Iv’e checked that many times. No matter what I do, I always get this error:
Error using print_info (line 74)
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
Error in steady (line 92)
Error in prac2 (line 464)
Error in dynare (line 180)
I know what the error means. Iv’e been reading dynare forums all day. I tried to compute all steady state values by hand and substituted them in the initval block. Upon running the code, I again got the same message.
I would be extremely thankful if someone could give me a way out? I have attached all files for your reference.
model2.mod (10.1 KB)
model1.mod (10.1 KB)
parameters.pdf (79.4 KB)
equilibrium_conditions.pdf (172 KB)