Dear users and Johannes Pfeifer,
I have another questions on replication of another paper: Leveraged borrowing and boom-bust cycles”, by Patrick A. Pintus and Yi Wen in the Review of Economic Dynamics . This paper is also related with Kiyotaki and Moore (1997). I am trying to replicate the competitive equilibrium
with borrowing constraints (Section 2.3). For this section, this paper provides its the linearized version of the equations in Appendix A.
I think the equations in Appendix A of this paper are very good application of "Listing 3: Log-linearized baseline model:A Guide to Specifying Observation Equations for the Estimation of DSGE Modelsby Johannes Pfeifer. Then, I coded up Appendix A equations using Listing 3: Log-linearized baseline model.
However, I face some problems.
in Listing 3: Log-linearized baseline model, I think steady state values defined after #, such as #k_ss or #y_ss are necessary. How we could find/compute steady state values in #k_ss or #y_ss ?
With my best of understanding, I coded up the attached mod files for Appendix A . But these files show the following error messages:
"Warning: Some of the parameters have no value (CL_ss, CB_ss, B_ss, K_ss, LL_ss, LB_ss, Q_ss, Y_ss, L_ss) 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… "
I would like to get advice to solve my situations.
Pintus_and_Wen.mod (4.3 KB)
1-s2.0-S1094202512000567-main Leveraged borrowing and boom–bust cycles.pdf (403.6 KB)