Replication of Greenwood et al

General DSGE Modeling Replication Attempts
1

Hi there! I am struggling to replicate this paper: Greenwood, J., Hercowitz, Z., Krusell, P., 2000. “The role of investment-specific technological change in the business cycle”.

I have derived all equations in the paper, calculated steady state. The only simplifications I made were to set TFP = z= 1, and use rate of capital h = 1.

However, I keep getting same error over and over again in Dynare: Error using print_info (line 76)
The steadystate file did not compute the steady state
Error in steady (line 104)
… ;
Residuals of the static equations:

Equation number 1 : -0.032
Equation number 2 : 0
Equation number 3 : -3.4391
Equation number 4 : 0.10797
Equation number 5 : 0
…

I do not understand which equations I should check to see where is the problem. For example, when there are residuals seen in “Equation number 1” - which exactly equation is this in the mod file? Please can you help or advise me? I very much hope that you will respond me.

2

It means that the Model and steady state equations do not yield the same result when dropping all time subscripts. Equation number 1 is usually - to my experience- the first equation in the model section etc. It seems you are having several problems and you should re-check the steady state solutions thoroughly, i.e. drop time subscripts in the model equations and see if the results are the same as in steady state.

1 Like
3

Thank you for your quick response ! I will check it ! I will revert back with the results.