Hello,

I’m trying to replicate the RBC model with monopolistic competition that is anaalyzed in the User Guide – Public Beta Version (chapter 3.2) (I’m using Dynare version 3.065).

I have noted that if we change the method that is used for compute the steady state (command: steady(solve_algo = …)), the simulation leads to a two different result.

In particular, when we use **steady(solve_algo=0), steady(solve_algo=1) or steady(solve_algo=2), **the steady state results:

c 0.707986

i 0.184098

k 8.00426

l 0.302733

r 0.033101

w 1.7769

y 0.892084

y_l 2.94677

z 1.27447e-056

whereas if we use **steady(solve_algo=3), **the steady state results:

c 0.76

i 0

k 9

l 0.3

r 0.03

w 2.07

y 0

y_l 0

z 0

Moreover, as you can see from the figures, also the Impulse Response Functions (IRFs) are differents.

My questions are: Am I miss something? Where is the error in my simulation? Which is the right solution?

Thank you very much.

Fabio

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