Shocks without error and steady state file

Steady state
1

Hello,

I am trying to run the model. I dont know if my approach is correct. I have the process for the lambda as in equation 63. lambdass corresponds to lambda at time zero which I want to define to be 2. I don’t have error terms and and want to see effect of change in lambda; for example a shock at time 3.

I got many errors regarding the steady state file. Can I have help how I can fix this ?

Best Regards

model.mod (1.2 KB) model_steadystate.m (1.4 KB)

2

Your steady state file needs to solve the model sequentially. You cannot use K to define another variable’s value before you have computed K itself

3

Dr Pfeifer,

Is it possible to solve it by using fsolve in the steady state file ?

As it is in Jermann_Quadrini_2012_RBC_steadystate

Thankyou

4

Yes, that would be possible. But often it can actually be computed analytically. You need a strategy for solving for the steady state.

5

Hello Dr Pfeifer,

I was able to solve some steady state equations analytically but for K and Y that is not possible. Is there any other way to get steady solution of K in this file ?

Best

model_steadystate.m (2.0 KB)

6

Then you need to call a numerical solver to compute the rest.