Hi all,

I am trying to replicate Pengfei-Wang(2012) “Understanding Expectation‐Driven Fluctuations: A Labor‐Market Approach.” paper. But I have some trouble, for example

ERROR: If the model is declared linear the second derivatives must be equal to zero.

The following equations had non-zero second derivatives:

* Eq # 2

I think it should be that Euler equation is being solved wrong. Or there are other problems, please give guidance. Any help would be greatly appreciated. wangModel1.mod (1.7 KB)

thanks all.