Hi,

I am trying to replicate an OLG model used in the paper “AN ECONOMIC ANALYSIS OF THE EXISTING TAXATION OF PENSIONS (EET) VERSUS AN ALTERNATIVE REGIME (TEE)”.

An economic analysis of the existing taxation of Pensions (EET) versus an alternative regime (TEE).pdf (907.8 KB)

As a fundament for my own research. In my own code, I don’t get a steady state, the residuals in my model equations are too large. I don’t see what I do wrong. Note that there are 3 different agents (j) and 3 different time periods: two working periods and 1 where the agent is retired.

Could someone help me?

Kind regards,

Christel

UK_Model_v2.mod (6.0 KB)

Use `resid`

before `steady`

to see that there are huge residuals given your initial values. I suspect that it has to do with the scaling in your model. You seem to be combining actual currency values with normalized model elements like TFP.

Hi,

Thank you! I was indeed combining actual currency values with normalized model elements like TFP. Solving this reduced the residuals a lot.

Furthermore, I reduced the model a lot to see where errors occur. I still don’t get a steady state solution. I hope you could help me, I am now stuck while writing my master thesis.

Simplified.mod (1.8 KB)

The attache file finds a steady state: Simplified.mod (1.8 KB)

But the timing seems to be wrong.

Thank you so much! My ‘big’ model has results now too!