Dear Prof. Johannes,

I am trying to simulate a RBC model with search and matching frictions à la Fonseca and Munoz (2003). For the past 4 weeks, I have recalculated the steady state with pen and pencil yet I still struggle to solve the model. I think I am quite close to solving the problem as there is only 1 equation in each file whose residual is -0.00008.

In dgematching file, I have fixed the steady state of output (y_star=1) while in match1, I have endogenously found the steady state of output (y_star). In the former, the technology function residual is -0 while in the latter the euler equation residual is -0.

I look forward to receiving your help

Best Regards

dgematching.mod (2.3 KB)

match1.mod (2.4 KB)