Salter-Swan Small Open Economy DSGE


I am trying to build a DSGE model based on the Salter-Swan micro-founded small open economy model, for which the framework is in the attached document.

Reviving the Salter-Swan small open economy model.pdf (1.4 MB)

However, I have been unsuccessful in defining the model equations correctly it seems. From my understanding, the whole of the model is covered in section 2. The Model and 3. The Equilibrium. I have attempted to convert the model in the below code.

Dynare Model (1).txt (1.8 KB)

I would greatly appreciate if someone could let me know the mistakes I’ve made in defining the model and provide some guidance in terms of a correct specification of the model.

  1. I would recommend using the Dynare \LaTeX-capacities to visualize whether the equations were correctly entered.
  2. You need to provide explicit steady state starting values in an initval block.