Small Open Economy TANK

Steady state
1

Hi everyone. I am working on a SOE-TANK model based on two different models available in Nispi Landi’s website (Valerio Nispi Landi Webpage - DSGEs): a SOE-RANK and a closed economy TANK. Here, I assume GHH preferences and a simple heterogeneity index.

I cannot find the steady state because there are five equations with non-zero residuals (with particularly high residuals in the labor FOCs). I would argue that the policy and firm side is correct (as there are no changes), but I don’t really see where the issue is.

tank6.mod (5.7 KB)
tankprueba6.m (3.4 KB)

2

You did not adjust the steady state computations in the Matlab file to reflect your modifications. There, hours worked are set to
h=1/3; % hours of work
which does not conform to your new setup with two agents.