RBC Model with Heterogenous Agents

Hello! I am a beginner at Dynare and I need all the help I can get.
I built a simple RBC model with a fraction of the households ricardian and the others non-ricardian. I was able to analytically solve the steady state values and since I know the parameters, I was able to derive numerical values for them as well. However, Dynare is unable to find the steady state and thus the impulse response functions for my model and I am not sure as to whats exactly wrong since I believe I have derived the right equations and initial values.
I need this for my thesis and in desperate help.

Thanks in advance!

heterogenous.mod (3.8 KB)

You did not set all parameters. theta_g and theta_b are missing.

Thanks a lot! I fixed that but now I am running into the dreaded “the rank condition ISN’T verified!”

Again much help needed.
heterogenous.mod (3.8 KB)

Hi, if I’m not wrong, bonds are predetermined. Try to change B with B(-1) in line 83 (definition of tax) and it should work.

Hi hlt25,

Thanks for the suggestion. I tried that but it still isn’t working. It used to say there are “3 eigenvalue(s) larger than 1 in modulus for 1 forward-looking variable(s)” but it now says “2 eigenvalue(s) larger than 1 in modulus for 1 forward-looking variable(s)”.

Do I need to let dynare know B(nominal bonds are predetermined?) Can anyone point me to a paper or Dynare codes with a simple RBC MODEL that has heterogenous agents?

Much thanks!!


Model is able to run now but my impulse response functions look squiggly(zig zaggy).

Anyone has an idea as to why that is happening and how I can fix it ?


heterogenous.mod (3.8 KB)

Check your fiscal rules. My hunch is there is a sign error somewhere, making taxes oscillate.

Hi, what is your formula?