Dear Prof Johannes,
I am doing perfect foresight simulation, in some case Dynare ran very quickly and can solve the problem. Yet, in other case it reports “no convergence” as below:
Iter. | Lambda | status | Max. residual
++++++++++++++++++++++++++++++++++++++++++++++++++++++
1 | 0.50000 | succeeded | 6.442782e-09
2 | 1.00000 | failed | 9.628932e-02
3 | 0.75000 | failed | 4.796007e-02
4 | 0.62500 | succeeded | 6.107341e-06
5 | 0.75000 | failed | 2.422837e-02
6 | 0.68750 | failed | 1.210255e-02
7 | 0.65625 | failed | 6.048381e-03
8 | 0.64063 | failed | 3.023478e-03
9 | 0.63281 | succeeded | 3.775955e-07
10 | 0.64063 | failed | 1.513020e-03
11 | 0.63672 | failed | 7.564655e-04
12 | 0.63477 | failed | 3.782222e-04
13 | 0.63379 | succeeded | 6.320937e-07
14 | 0.63477 | failed | 1.891554e-04
15 | 0.63428 | succeeded | 8.310898e-06
16 | 0.63477 | failed | 9.461683e-05
17 | 0.63452 | failed | 4.732124e-05
18 | 0.63440 | succeeded | 7.011321e-06
19 | 0.63452 | failed | 2.367930e-05
20 | 0.63446 | failed | 1.185387e-05
21 | 0.63443 | succeeded | 7.249863e-06
22 | 0.63446 | failed | 1.185387e-05
23 | 0.63445 | succeeded | 8.897512e-06
24 | 0.63446 | failed | 1.185387e-05
++++++++++++++++++++++++++++++++++++++++++++++++++++++
It stops after 24 iterations (homotopy) though I think the result is good enough.
Could I use this simulation? That is I would accept a bit higher tolerance > 1e-5.
Another question is “does perfect foresight estimation always have a solution?” If Dynare cannot solve the model by default settings what I should do?
Thank you and best regards,