RBC model with variable capital utilization

Steady state
1

Hello,

I was asked to find the steady-state of a RBC model with variable capital utilization.
the utility function is given by ln Ct + chiln(1-Nt). Capital services are defined as kt=utKt and the dependence of capital depreciation on capacity utilization is modeled as delta(ut)=delta_o*(ut)^(delta_1). I was asked to find the steady state of the model normalizing utilization 1.
I’ve uploaded the code I wrote and which is not working. Can someone please tell me what I’ve done wrong.
I’m a PhD student and I’m new to dynare so please forgive me if I made any basic mistake.

Thank you.ex1bRBC.mod (1.0 KB)

2

Hi francisconobre,

Pay attention to parentheses

r=alpha*(y/u*k(-1));

yields a large residual in the static equation 8, yet

r=alpha*(y/(u*k(-1)));

eliminates the residual.

Continue debugging :slightly_smiling_face: .