Schmitt-Grohe and Uribe JIE, 2003, Model 1 - Endogenous discount factor

Hello to all,
I tried to replicate the model using the script provided by Mr. Pfeifer available at (
I used calibration parameters for Italy case:
gamma = 2.21;
omega = 2;
psi_1 = 0;
alpha = 0.32;
phi = 0.53 ;
r_bar = 0.04;
delta = 0.033264732;
rho = 0.1883;
sigma_tfp = 0.006335167;
psi_2 = 0.000742;
d_bar = 0.7442;
psi_3 = 0.00074;
psi_4 = 0;

I got this message:

Error using print_info (line 88)
The steady state is complex
Error in stoch_simul (line 100)
print_info(info, options_.noprint, options_);
Error in itmod1 (line 197)
info = stoch_simul(var_list_);
Error in dynare (line 223)
evalin(‘base’,fname) ;

As far as I understand, there is no a steady state???
What is suggested to do in this case?

Thank you in advance.

Please provide the full file.

Thank you for the reply Mr. Pfeifer.
Waiting for suggestions.
Kind regards.

itmod1.mod (6.9 KB)

Your model features a negative eta and lambda. Removing the exp()-solves this problem, but the model does not make sense in this case. You need to find out why this is the case.
itmod1.mod (6.8 KB)

I’ll work on better calibration of the model then.
Thank you for the reply.