Hi Max1,

thank you for your quick replay. I corrected the undefined parameters but now I’m facing a new problem. When I run the code I receive following error message:

dynare ALR_rep_4.mod

Using 64-bit preprocessor

Starting Dynare (version 4.6.4).

Calling Dynare with arguments: none

Starting preprocessing of the model file …

Found 13 equation(s).

Evaluating expressions…done

Computing static model derivatives (order 1).

Computing dynamic model derivatives (order 2).

Processing outputs …

done

Preprocessing completed.

**Warning: Some of the parameters have no value (omega1, xi_phi, pi_ss, r_ss, xi_ss, phi_ss, mughat, psi) when using steady. If these parameters are not**

**initialized in a steadystate file or a steady_state_model-block, Dynare may not be able to solve the model…**

STEADY: numerical initial values or parameters incompatible with the following equations

1 4 6 7

Check whether your model is truly linear. Put “resid(1);” before “steady;” to see the problematic equations.

Residuals of the static equations:

Equation number 1 : NaN : Log-linearized Euler equation (18)

Equation number 2 : NaN : Money demand relationship for government currency (19)

Equation number 3 : NaN : Money demand relationship for cryptocurrency (20)

Equation number 4 : NaN : Forward-looking Phillips curve (21)

Equation number 5 : NaN : Log-linerarized FOC derived from the profit maximization problem (22)

Equation number 6 : NaN : Log-linerarized expression for the entrepreneurs productivity that depends on the common producticity in the cryptocurrency sector as well as on the specific productivity of the EN (23)

Equation number 7 : NaN : Log-linerarized Monetary Policy Rule (24)

Equation number 8 : 0 : temporary preference shock to the IS curve (3)

Equation number 9 : 0 : temporary preference shock on money demand to government money (4)

Equation number 10 : 0 : temporary preference shock on money demand to cryptocurrency (5)

Equation number 11 : 0 : temporary prefernece shock on the productivity of the other entrepreneuer via common component (6)

Equation number 12 : 0 : temporary preference shock on the specific programming skills of the entrepreneur (7)

Equation number 13 : 0 : temporary technology shock (productivity shock) (14)

Error using print_info (line 32)

The steady state has NaNs or Inf.

Error in steady (line 102)

print_info(info,options_.noprint, options_);

Error in ALR_rep_4.driver (line 375)

steady;

Error in dynare (line 293)

evalin(‘base’,[fname ‘.driver’]) ;

I know that the problem are the following parameter: omega1, xi_phi, pi_ss, r_ss, xi_ss, phi_ss, mughat, psi. Since these parameter are part of the model equations, I added them at the list of delcered parameters but the problem which I’m facing now is that I don’t have estimated values for them.

ALR_rep_4.mod (11.5 KB)

Please can you tell me how I can solve such a problem?

Thank you and best regards,

Renate