Hello everyone,

I am replicating a paper that introduces nominal wage rigidities into the search and matching model framework.

Yesterday I encountered something that was very strange to me:

The fifth equation in my model gives the free entry condition, which is obtained by imposing the value of a vacany equal to zero. The equation in question is the following (quation 51 in the attached paper):

```
c=beta*q*A_N(+1);
```

Now by writing the equation this way, the code does not run and dynare cannot find any stady state. I noticed, however, that by rearranging the terms and writing:

```
c/q=beta*A_N(+1);
```

the code runs correctly with no errors and the residuals are zero.

This confused me greatly, as mathematically nothing has changed, but dynare is now able to find a stady state. By doing several tests and rewriting this equation differently sometimes dynare finds a SS and sometimes it does not. In the cases where an SS is reached, the values found are always the same.

I cannot understand why this happens, am I not considering some rule in dynare? Thank you for any explanation.

search_calvo_2007.mod (2.3 KB)