Problems with finding steady state for RBC model

[Jacob02]

Hey, I’m relative new to Dynare. I’m trying to recreate Eric Sims RBC model, where he extends it with real financial frictions. I am however not able to solve the model in Dynare. Can anyone help me?

BA_Model.mod (2.2 KB)

[jpfeifer]

Try: BA_Model.mod (2.2 KB)

[Jacob02]

thank you so much, I really apreciate it

[Jacob02]

Hey Johannes,

I have tried your approach and my model now works, but as soon as I want to log-linearize (by taking exp()) to the endogenous variables it cannot find an solution.

BA_Model_v2.mod (2.5 KB)
BA_Model_v2_log.mod (2.6 KB)

[jpfeifer]

But why would you want to do that? There are better alternatives:

Question about understanding irfs in dynare

To be more precise: it depends on how the variables in your model are measured. As @stepan-a says, Dynare conducts a linearization. If you for example have a nonlinear model and your model variable is simply the level of output, the IRF will measure the difference between the variable and its steady state (or its mean at higher order). This is the case with https://github.com/DynareTeam/dynare/blob/master/examples/example1.mod In contrast, if your model variable already measures percentage…