Hi,

I’m trying to learn how dynare modeling works. I use the Smets model (aatached above). I hope all equationsare written correctly. However I faced two problems: 1)Simulation of the perfect foresight model failed! 2)Failed to find a solution to the linear system. Are these problemes caused by random data I used? or they are caused by incorrect equations I typed.

I would appreciate your advices and solutions for these problems!

thank you.

MODEL.mod (2.3 KB) part11.pdf (896.2 KB)

The equation

```
pepsilon(+1) = prho + peta - pmup * peta(-1);
```

does not contain a constant term `prho`

that should not be there.Your model is linearized, so all steady states should be 0.

I changed this equation, there was a mistake . What should I do to get a 0 steady states?

These model has another equation, that explains endogenous var y, but in that case ve have 19 var and 20 equations.

MODEL.mod (2.3 KB)

Delete the initval-block. All initial values must be 0. Once you do this, you will see that your model does not satisfy the BK conditions. So there must be a mistake somewhere.