# Problems with self-computed steady state solving GK(2011)

Hello!

Dynare and all of this is very new to me and I am a little lost right now: I am trying to solve the model of Gertler and Karadi (2011) writing the variables in exp(var)-form. I calculated the steady state myself using the parameters available from the paper. I get the following message (including the command *steady; * and check;):

SOLVE: Iteration 5
Spurious convergence.
1.0e+03 *

``````0.0000
0.0021
0.0000
0.0039
0.0048
0.0017
0.0002
0.0008
0.0008
0.0007
0.0000
0.0035
0.0014
``````

-0.0001
0.0015
0.0004
0.0001
0.0008
0.0000
0.0007
-0.0008
-0.0007
-2.8047
0.0009
0.0009
0.0010
0.0010
0
0.0007
0
-0.0000
0.0005
0.0010
0.0028
0.0035

Residuals of the static equations:

Equation number 1 : 21.7535
Equation number 2 : 7.7272
Equation number 3 : 6.3894
Equation number 4 : 1.7183
Equation number 5 : -0.38677
Equation number 6 : 0
Equation number 7 : -29.3803
Equation number 8 : -6.2813
Equation number 9 : 542.4695
Equation number 10 : 67.7677
Equation number 11 : -0.96656
Equation number 12 : -6.7994
Equation number 13 : -3.2416
Equation number 14 : -40.2667
Equation number 15 : -20.9648
Equation number 16 : -65.2277
Equation number 17 : -821.3634
Equation number 18 : -1.2574
Equation number 19 : 1.0577
Equation number 20 : 800.9386
Equation number 21 : 0
Equation number 22 : 1.7183
Equation number 23 : 1.3523
Equation number 24 : 1.2504
Equation number 25 : -819.8285
Equation number 26 : 15.3607
Equation number 27 : 3.1926
Equation number 28 : -0.52669
Equation number 29 : -494.4997
Equation number 30 : -4.7182
Equation number 31 : -4.0163
Equation number 32 : -0.25214
Equation number 33 : 0
Equation number 34 : 0.05
Equation number 35 : 0.34

Error using print_info (line 57)
Impossible to find the steady state. Either the model doesn’t have a steady state, there are an infinity of steady states, or the
guess values are too far from the solution

print_info(info,options_.noprint);

Error in check (line 432)

Error in dynare (line 120)
evalin(‘base’,fname) ;

I don’t know how to interpret the residuals or this spurious convergence table. What can I do to get this running?

and my file:

[quote=“beginner”]Hello!

Dynare and all of this is very new to me and I am a little lost right now: I am trying to solve the model of Gertler and Karadi (2011) writing the variables in exp(var)-form. I calculated the steady state myself using the parameters available from the paper. I get the following message (including the command *steady; * and check;):

SOLVE: Iteration 5
Spurious convergence.
1.0e+03 *

``````0.0000
0.0021
0.0000
0.0039
0.0048
0.0017
0.0002
0.0008
0.0008
0.0007
0.0000
0.0035
0.0014
``````

-0.0001
0.0015
0.0004
0.0001
0.0008
0.0000
0.0007
-0.0008
-0.0007
-2.8047
0.0009
0.0009
0.0010
0.0010
0
0.0007
0
-0.0000
0.0005
0.0010
0.0028
0.0035

Residuals of the static equations:

Equation number 1 : 21.7535
Equation number 2 : 7.7272
Equation number 3 : 6.3894
Equation number 4 : 1.7183
Equation number 5 : -0.38677
Equation number 6 : 0
Equation number 7 : -29.3803
Equation number 8 : -6.2813
Equation number 9 : 542.4695
Equation number 10 : 67.7677
Equation number 11 : -0.96656
Equation number 12 : -6.7994
Equation number 13 : -3.2416
Equation number 14 : -40.2667
Equation number 15 : -20.9648
Equation number 16 : -65.2277
Equation number 17 : -821.3634
Equation number 18 : -1.2574
Equation number 19 : 1.0577
Equation number 20 : 800.9386
Equation number 21 : 0
Equation number 22 : 1.7183
Equation number 23 : 1.3523
Equation number 24 : 1.2504
Equation number 25 : -819.8285
Equation number 26 : 15.3607
Equation number 27 : 3.1926
Equation number 28 : -0.52669
Equation number 29 : -494.4997
Equation number 30 : -4.7182
Equation number 31 : -4.0163
Equation number 32 : -0.25214
Equation number 33 : 0
Equation number 34 : 0.05
Equation number 35 : 0.34

Error using print_info (line 57)
Impossible to find the steady state. Either the model doesn’t have a steady state, there are an infinity of steady states, or the
guess values are too far from the solution

print_info(info,options_.noprint);

Error in check (line 432)

Error in dynare (line 120)
evalin(‘base’,fname) ;

I don’t know how to interpret the residuals or this spurious convergence table. What can I do to get this running?[/quote]

check.mod (6.83 KB)

To get the steady state, you have to provide the initial value that get the very small residual.
From my understanding, the residual is the different value between your initial value and true steady state value.
Thus, you have to guess the initial values that are very close to steady state.

But your model has too much variables and your residual values remain large.
Large residuals mean your initial values are remain far from true steady state values.
I suggest you to construct a small model first to get the true steady state values because it is easier to solve model with few variables.
Then extend your model and use the true steady state values from first model as initial values in second model.
If you get steady state values from second model, extend your model to third model and use the steady state values from second model as initial values.
Until you extend to your full model…

Hope this help. (Sorry if my writing is not good)

Yeah, I figured that… I also discovered that I have to take the logs of the steady state values I computed as initial values since I’m having the var’s in exponential form… Most of my residuals are 0 now and I’m about to get the rest there soon hopefully. Thanks!

please can you tell me how to you compute your steady state value.I mean how do you know the equation for example

// Retailers
mu = epsilon/(epsilon-1);
Pm_ss = 1/mu;
pi_ss = 1;

// Households
R_ss = 1/beta;
i_ss = R_ss;
disco_ss = 1;

thank you