No the steady states

Steady state
1

Hi everyone,

I’m new to dynare, I’m trying to simulate a DSGE model (in the attached file).
I can’t find the steady states, find below the error message.

Any suggestions please ?

Residuals of the static equations:

Equation number 1 : 0 : Lambda
Equation number 2 : 0 : Wg_ne
Equation number 3 : 0 : Wg_f
Equation number 4 : 0 : Wg_l
Equation number 5 : 0 : 5
Equation number 6 : 0 : Y
Equation number 7 : 0.030989 : NE
Equation number 8 : 0 : E
Equation number 9 : 0 : N_ne
Equation number 10 : 0 : K_ne
Equation number 11 : 0 : sigma
Equation number 12 : 0 : 12
Equation number 13 : 0 : E_l
Equation number 14 : 0 : E_f
Equation number 15 : 0 : 15
Equation number 16 : 0 : 16
Equation number 17 : 0 : 17
Equation number 18 : -48.5571 : Q_ne
Equation number 19 : -48.87 : Q_f
Equation number 20 : -48.6822 : Q_l
Equation number 21 : 0 : 21
Equation number 22 : 0 : K_f
Equation number 23 : 0 : K_l
Equation number 24 : -0.08 : 24
Equation number 25 : 0.10452 : 25
Equation number 26 : 0 : R_l
Equation number 27 : -0.02 : 27
Equation number 28 : 0.009 : Em
Equation number 29 : 0 : 29
Equation number 30 : 0 : R_f
Equation number 31 : 0 : T
Equation number 32 : 0 : 32
Equation number 33 : 0 : R
Equation number 34 : 0 : C
Equation number 35 : 0 : 35
Equation number 36 : 0 : 36
Equation number 37 : 0 : 37
Equation number 38 : 0 : 38
Equation number 39 : 0 : 39
Equation number 40 : 0 : G
Equation number 41 : 0 : 41
Equation number 42 : 0 : Tem
Equation number 43 : 0 : 43

Residuals of the static equations:

Equation number 1 : -6.8737e-06 : Lambda
Equation number 2 : -2.5211e-06 : Wg_ne
Equation number 3 : -2.3795e-06 : Wg_f
Equation number 4 : 0.0015335 : Wg_l
Equation number 5 : 0 : 5
Equation number 6 : 2.3607e-05 : Y
Equation number 7 : -5.0773e-06 : NE
Equation number 8 : -1.1671e-05 : E
Equation number 9 : -1.2611e-05 : N_ne
Equation number 10 : -0.0001184 : K_ne
Equation number 11 : 0 : sigma
Equation number 12 : 0.00015701 : 12
Equation number 13 : -0.017208 : E_l
Equation number 14 : -3.5934e-06 : E_f
Equation number 15 : 0 : 15
Equation number 16 : 0 : 16
Equation number 17 : 0 : 17
Equation number 18 : 4.0522e-06 : Q_ne
Equation number 19 : 2.3997e-06 : Q_f
Equation number 20 : -0.00027103 : Q_l
Equation number 21 : 3.685e-06 : 21
Equation number 22 : 4.1442e-06 : K_f
Equation number 23 : 4.144e-06 : K_l
Equation number 24 : 0.026188 : 24
Equation number 25 : -0.0015327 : 25
Equation number 26 : -0.014497 : R_l
Equation number 27 : 2.198e-05 : 27
Equation number 28 : -0.054052 : Em
Equation number 29 : 5.5937e-07 : 29
Equation number 30 : -5.7698e-05 : R_f
Equation number 31 : 0 : T
Equation number 32 : 0 : 32
Equation number 33 : 0 : R
Equation number 34 : -1.5549e-05 : C
Equation number 35 : 0 : 35
Equation number 36 : 0 : 36
Equation number 37 : 0 : 37
Equation number 38 : 0 : 38
Equation number 39 : 0 : 39
Equation number 40 : 0 : G
Equation number 41 : 0 : 41
Equation number 42 : 0 : Tem
Equation number 43 : 0 : 43
Test.mod (14.3 KB)
Test.mod (14.3 KB)

Error using print_info
Impossible to find the steady state (the sum of squared residuals of
the static equations is 0.0041). 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 102)
print_info(info,options_.noprint, options_);

Error in Test.driver (line 860)
steady;

Error in dynare (line 281)
evalin(‘base’,[fname ‘.driver’]);

2

You have three equations with large residuals

I would focus on those.

3

What do you mean ? There maybe some issues with them in the model block or in the parameters block ?You suggest to change those equations or to delete them?

4

No, I am saying that the steady state values you computed differ quite a lot from the ones implied by your equations. That usually indicates a mistake in one the two.

5

you’re right, great thanks. I did a mistake in my computation.
I got the steady states. Is that acceptable or do I still need to check my equations because all residuals are not equal to zero ?

Residuals of the static equations:

Equation number 1 : 0 : Lambda
Equation number 2 : 0 : Wg_ne
Equation number 3 : 0 : Wg_f
Equation number 4 : 0 : Wg_l
Equation number 5 : 0 : 5
Equation number 6 : 0 : Y
Equation number 7 : -0.05896 : NE
Equation number 8 : 0 : E
Equation number 9 : 0 : N_ne
Equation number 10 : 0 : K_ne
Equation number 11 : 0 : sigma
Equation number 12 : 0 : 12
Equation number 13 : 0 : E_l
Equation number 14 : 0 : E_f
Equation number 15 : 0 : 15
Equation number 16 : 0 : 16
Equation number 17 : 0 : 17
Equation number 18 : 0.0046 : Q_ne
Equation number 19 : 0.0046 : Q_f
Equation number 20 : 0.0046 : Q_l
Equation number 21 : 0 : 21
Equation number 22 : 0 : K_f
Equation number 23 : 0 : K_l
Equation number 24 : -0.08 : 24
Equation number 25 : 0.74074 : 25
Equation number 26 : 0 : R_l
Equation number 27 : -0.02 : 27
Equation number 28 : 0.009 : Em
Equation number 29 : 0 : 29
Equation number 30 : 0 : R_f
Equation number 31 : 0 : T
Equation number 32 : 0 : 32
Equation number 33 : 0 : R
Equation number 34 : 0 : C
Equation number 35 : 0 : 35
Equation number 36 : 0 : 36
Equation number 37 : 0 : 37
Equation number 38 : 0 : 38
Equation number 39 : 0 : 39
Equation number 40 : 0 : G
Equation number 41 : 0 : 41
Equation number 42 : 0 : Tem
Equation number 43 : 0 : 43



STEADY-STATE RESULTS:

C      		 0.544695
Lambda 		 4.38661
N_ne   		 0.232179
N_l    		 0.0364155
N_f    		 0.0150693
Wg_ne  		 2.10703
Wg_l   		 0.640978
Wg_f   		 1.35807
R      		 1.00462
Y      		 0.996116
NE     		 0.876215
E      		 0.125837
A_ne   		 1
K_ne   		 9.28993
MC     		 0.833333
p_e    		 0.522184
R_ne   		 0.0296213
Pi     		 1
E_l    		 0.0856617
E_f    		 0.05139
p_l    		 0.408727
p_f    		 0.597348
Q_ne   		 1
I_ne   		 0.232248
Q_f    		 1
I_f    		 0.00747066
Q_l    		 1
I_l    		 0.00948022
R_l    		 0.0246213
R_f    		 0.0171213
K_l    		 0.474011
K_f    		 0.597653
A_l    		 1
A_f    		 1
Em     		 0.0231255
Tem    		 0
T      		 0.202222
G      		 0.202222
R_N    		 1.00462
U_beta 		 1
U_rn   		 1
U_G    		 1
U_Tem  		 1
6

There is no way to answer that. The steady state values seem to make sense. But the discrepancy between the initially computed and actual steady states may still indicate a problem with the model equations. You are the only one who can judge that.

7

Got it, thanks a lot Pr.