I got a problem in dynare when running the steady state block. The result is ’ Impossible to find the steady state.’ I checked the residual of all the equations with large residuals, and found out something goes wrong with the variable ’ tao’. (This is a tax rate variable for government to finance the government spending and there are potential shocks in the tax rate.) All I did about ‘tao’ is, set up a steady state value, put it in the government budget constrain and set up a dynamic equation with error term.
It would be nice if someone would help me with this issue. Thanks in advance.test.mod (8.5 KB)