Ramsey optimal taxation

Dynare help (legacy posts)
1

Hello,

I am trying to solve for the optimal tax rate on profits, but I keep getting the following error message:

STEADY: numerical initial values incompatible with the following equations
2

??? Error using ==> dynare_solve at 82
exiting …

Error in ==> steady_ at 124
[oo_.steady_state,check] = dynare_solve([M_.fname ‘_static’],…

Error in ==> steady at 52
steady_;

Error in ==> ramsey at 174
steady;

Error in ==> dynare at 132
evalin(‘base’,fname)

I checked carefully the calibration and it seems to be OK: when evaluated at the steady state all equation line up.

Could you please give me an idea where the problem can be??? Attached is the code. Thanks!!!
ramsey.mod (1.98 KB)

2

You don’t give an initial value for consumption, hence zero is chosen and results in numerical error when raised to the power.

3

Thanks for your reply. I managed to fix the problem already :slight_smile:

4

Hi!
I am also one of the those guys who also have a problem to solving the questions of the answers of the numerical but it is sure that with the passage of time this problem could also be very easily solved and your precious suggestions are also great source to me.thanks and keep it up.