Problem with Steady State File

Steady state
1

Dear Prof. Pfeifer and Dynare Community,

I have a model in which some parameters are calibrated such that some endogenous variables in steady state remain at particular value (e.g. I want to normalize steady state labor supply to 1, so I choose labor disutility scaling parameter in HH’s utility function such that L=1 in steady state). In the future I’d like to estimate my model, so (as I understand) for this case I need to specify a separate steady state file, because I need my parameters from above to be updated after each MCMC draw. I tried to implement that but after running dynare I experience the following error:

Warning: Some of the parameters have no value (psig, psis, nu) when using steady. If these parameters
are not initialized in a steadystate file or a steady_state_model-block, Dynare may not be able to
solve the model. Note that simul, perfect_foresight_setup, and perfect_foresight_solver do not
automatically call the steady state file.

Error using print_info
The steadystate file did not compute the steady state

Error in steady (line 102)
print_info(info,options_.noprint, options_);

Error in Model_TwoSector_Tameplate.driver (line 1057)
steady;

Error in dynare (line 281)
evalin(‘base’,[fname ‘.driver’]);

Error in Main (line 3)
dynare Model_TwoSector_Tameplate.mod

While setting up a separate steady state file I was following NK_baseline.mod and NK_baseline_steadystate.m from Dynare’s installation package. So, it seems like some of my parameters remain unupdated after running steady state file, that is why dynare does not find steady state and reports nonzero residuals for some of my equations while trying to compute it. I feel super confused about this and hope you’ll help me figure it out. Thank you so much!

P.S.: I’m pretty sure that this is not a model’s problem as it runs well when I calculate steady state and all the parameters separately and BEFORE calling dynare. Files of this successful implementation can be found here:

https://drive.google.com/drive/folders/1aafPlG0jRkyOpLaTtsg3Y9v6AYaGPz1x?usp=sharing

Files that cause the problem with steady state file described above can be found here:

https://drive.google.com/drive/folders/1oGd306YpWSF1ncQoJGChPKq2Z9g4JeEU?usp=sharing

In both cases code Main.m is responsible for calling dynare and running my simulations. Thank you very much!

2
  1. Please carefully read the message. It’s a warning if the parameters are not set in a steady state file, which you correctly do.
  2. The problem is your provided steady state values. If you put resid in your initial file, you will see that the provided initial values do not actually solve the static model. Rather, they are reasonably close to the true values, so numerical steady state finding succeeds. But providing these wrong values as steady state values to take as given of course fails.
3

Thank you so much! I’ve found the problem with my SS and it works all fine now!