I was able to solve the model and find the steady state for my non-linear model. The next step, I need to find the optimal monetary policy that maximize the agent’s welfare! I used the following Ramsey’s policy command:

[code]planner_objective((C^(1-chii))/(1-chii)) + (((1-L)^(1-etta))/(1-etta));

ramsey_policy(planner_discount=0.99,order=1);[/code]

The consumption, C, here is a basket of home and foreign consumption, not sure if that matters! The thing is, I’m able to solve the model and find all the impulse response, however, once I replace stoch_simu command with ramsey_policy, I get the following error although as I mentioned the model had the right initial values. Thanks alot for your help!

[code] Starting Dynare (version 4.4.3).

Starting preprocessing of the model file …

Ramsey Problem: added 41 Multipliers.

Found 41 equation(s).

Found 82 FOC equation(s) for Ramsey Problem.

Evaluating expressions…done

Computing static model derivatives:

- order 1

Computing dynamic model derivatives: - order 1
- order 2

Computing static model derivatives: - order 1
- order 2

Processing outputs …done

Preprocessing completed.

Starting MATLAB/Octave computing.

Warning: Some of the parameters have no value

(optimal_policy_discount_factor) when using steady. If these

parameters are not initialized in a steadystate file, Dynare

may not be able to solve the model…

In test_for_deep_parameters_calibration at 46

In steady at 33

In Dec04_2014_Ramsey at 961

In dynare at 180

STEADY: The Jacobian contains Inf or NaN. The problem arises from:

STEADY: Derivative of Equation 18 with respect to Variable L (initial value of L: 0.333333)

STEADY: Derivative of Equation 9 with respect to Variable R_star (initial value of R_star: 0.796659)

STEADY: Derivative of Equation 10 with respect to Variable lammbda (initial value of lammbda: 1.26196)

STEADY: Derivative of Equation 27 with respect to Variable lammbda (initial value of lammbda: 1.26196)

STEADY: Derivative of Equation 11 with respect to Variable pn_omega (initial value of pn_omega: 1)

STEADY: Derivative of Equation 12 with respect to Variable pd_omega (initial value of pd_omega: 1)

STEADY: Derivative of Equation 13 with respect to Variable pf_omega (initial value of pf_omega: 1)

STEADY: Derivative of Equation 27 with respect to Variable po_omega (initial value of po_omega: 1)

STEADY: Derivative of Equation 10 with respect to Variable rk (initial value of rk: 0.035101)

STEADY: Derivative of Equation 18 with respect to Variable k (initial value of k: 9.52399)

STEADY: Derivative of Equation 18 with respect to Variable A (initial value of A: 0)

STEADY: Derivative of Equation 18 with respect to Variable Y (initial value of Y: 1.11434)

STEADY: Derivative of Equation 10 with respect to Variable pi (initial value of pi: 1)

STEADY: Derivative of Equation 11 with respect to Variable pi (initial value of pi: 1)

STEADY: Derivative of Equation 12 with respect to Variable pi (initial value of pi: 1)

STEADY: Derivative of Equation 13 with respect to Variable pi (initial value of pi: 1)

STEADY: Derivative of Equation 14 with respect to Variable pi (initial value of pi: 1)

STEADY: Derivative of Equation 27 with respect to Variable pi (initial value of pi: 1)

STEADY: Derivative of Equation 31 with respect to Variable pi (initial value of pi: 1)

STEADY: Derivative of Equation 32 with respect to Variable pi (initial value of pi: 1)

STEADY: Derivative of Equation 29 with respect to Variable pi_d (initial value of pi_d: 1)

STEADY: Derivative of Equation 34 with respect to Variable pi_d (initial value of pi_d: 1)

STEADY: Derivative of Equation 38 with respect to Variable pi_d (initial value of pi_d: 1)

STEADY: Derivative of Equation 30 with respect to Variable pi_f (initial value of pi_f: 1)

STEADY: Derivative of Equation 35 with respect to Variable pi_f (initial value of pi_f: 1)

STEADY: Derivative of Equation 39 with respect to Variable pi_f (initial value of pi_f: 1)

STEADY: Derivative of Equation 2 with respect to Variable pi_star (initial value of pi_star: 1)

STEADY: Derivative of Equation 27 with respect to Variable pi_star (initial value of pi_star: 1)

STEADY: Derivative of Equation 31 with respect to Variable pi_star (initial value of pi_star: 1)

STEADY: Derivative of Equation 32 with respect to Variable pi_star (initial value of pi_star: 1)

STEADY: Derivative of Equation 31 with respect to Variable s (initial value of s: 0.833333)

STEADY: Derivative of Equation 32 with respect to Variable s (initial value of s: 0.833333)

STEADY: Derivative of Equation 18 with respect to Variable q (initial value of q: 0.833333)

STEADY: Derivative of Equation 34 with respect to Variable pd_bar (initial value of pd_bar: 1)

STEADY: Derivative of Equation 35 with respect to Variable pf_bar (initial value of pf_bar: 1)

STEADY: Derivative of Equation 29 with respect to Variable j1 (initial value of j1: 2.8871)

STEADY: Derivative of Equation 34 with respect to Variable j1 (initial value of j1: 2.8871)

STEADY: Derivative of Equation 30 with respect to Variable j2 (initial value of j2: 0.412647)

STEADY: Derivative of Equation 35 with respect to Variable j2 (initial value of j2: 0.412647)

STEADY: Derivative of Equation 40 with respect to Variable Qs (initial value of Qs: 0.150072)

Reference to non-existent field ‘orig_index’.

Error in dynare_solve (line 53)

orig_var_index=M.aux_vars(1,infcol(ii)-M.orig_endo_nbr).orig_index;

Error in evaluate_steady_state (line 66)

[ys,check] = dynare_solve([M.fname ‘_static’],…

Error in steady_ (line 54)

[steady_state,params,info] =

evaluate_steady_state(oo_.steady_state,M_,options_,oo_,~options_.steadystate.nocheck);

Error in steady (line 81)

[steady_state,M_.params,info] = steady_(M_,options_,oo_);

Error in Dec04_2014_Ramsey (line 961)

steady;

Error in dynare (line 180)

evalin(‘base’,fname) ;

EDU>> [/code]