Replicating Sims and Wu (2019)


I am trying to replicate Sim and Wu “Evaluating Central Banks’ Tool Kit” paper. Before dealing with the OCCbin, I was hoping I could solve in dynare the model without the ZLB constraint. I solved the non-stochastic steady-state functions by hand and entered them in the steady_state.m file (see attached). I then entered the 50 equations as provided by the authors in model block.
My challenge is I keep getting several non-zero Residuals of the static equations. Any help would be greatly appreciated.paramfile_sm1.m (636 Bytes) sm.mod (14.5 KB) sm1_steadystate.m (3.5 KB)

in Dynare 4.5.7 I get

ERROR: sm.mod: line 179, cols 1-1017: nSS has wrong type or was already used on the right-hand side. You cannot use it on the left-hand side of a pound ('#') expression

Hi Jpfeifer,

I have fixed all my steady state values and all 50 residuals of the static equations are zero or almost zero. But i still get the “The steady state file did not compute the steady state” error. Your help once again will be appreciated.
Please see attached files.

Dennisparamfile_sm1.m (657 Bytes) smnl.mod (12.3 KB) smnl_steadystate.m (2.8 KB)

Your computation is too imprecise given the tolerance. Use


before steady to reduce it. After that, you will get a BK violation that is most probably due to a (timing) error in your model.

Hi Jpfeifer,

Thank you very much for your assistance so far. Your prompt responses have been very helpful to me. I have also resolved the BK violation.

I have yet another issue. I am trying to produce impulse responses for a negative Monetary policy shock with hit the economy in the 7th period (See Blue lines in the attached fig1 picture). After following your previous discussions on the use of “simult_” function. The impulse response I get clearly indicate I am not doing the right thing with the simult_ function. Please, are you able to help me with my current challenge? See attached files.paramfile_sm1.m (664 Bytes) smnl.mod (14.0 KB) smnl_steadystate.m (2.8 KB)

Where can I see the problem? I don’t know what you are expecting to get.

My impulse responses. For example output is decreasing with a negative policy rate shock.

That’s very hard to debug. Maybe you made a timing mistake when you fixed the BK error. I can only recommend rechecking all equations again.

Hi jpfeifer,

I checked my equations and there were some typos. The models works fine for now. Your comments have to very resourceful. Thank you.