Hello

I am working on a model of a small open two-sector economy in Dynare. I have got two versions of the model, one in levels to calculate the steady state (Model2) and then one in loglinear form to simulate IRFs (Model4). The model in levels works fine but in the loglinear version I have one equation too many and if I omit one which I think is redundant, I get the error “impossible to find steady state”. I have attached the mod files for both models and a pdf file with the equations for both written out in full. Any help you can offer would be greatly appreciated.

Many thanks

Elsa

Small open two-sector economy.pdf (72.7 KB)

Model4_fixL_nocorr_noprof.mod (5.5 KB)

Model2_fixL_allpam_noprof.mod (3.34 KB)