Hello,

I am solving a Ramsey optimal taxation problem and I have trouble finding the steady state values. I have derived the first order conditions (f.o.c.) of the Ramsey problem and have written them down in the ‘model’ part of the mod file. Since the f.o.c.-s contain the Lagrange multipliers, which I cannot isolate, Dynare cannot find the steady state of the variables.

I tried writing a MATLAB code, but it doesn’t work since I cannot write each ‘left-hand side variable’ in terms of known parameters or variables already solved in the lines above. Could you please tell me how to overcome this problem?

Many thanks!

Best,

Alpha