Solving DSGE models with financial accelerator

Hi Everyone,

I was trying to solve a closed economy DSGE model on Dynare. I am having the following error message repeatedly while trying to run the .mod file.

STEADY: numerical initial values incompatible with the following equations
8

Error using dynare_solve (line 96)
exiting …

Error in steady_ (line 120)
[oo_.steady_state,check] = dynare_solve([M_.fname ‘_static’],…

Error in steady (line 54)
steady_;

Error in test1 (line 224)
steady;

Error in dynare (line 120)
evalin(‘base’,fname) ;

Any help wiil be greatly appreciated.

MG

Given your initial values, or lack of them, you probably try to divide by zero.

Thank you very much! You were right i had zero values for some parameters. But i have a slightly different error message now related to convergence. Here it is…

SOLVE: maxit has been reached
Error using steady_ (line 132)
STEADY: convergence problems

Error in steady (line 54)
steady_;

Error in test1 (line 224)
steady;

Error in dynare (line 120)
evalin(‘base’,fname) ;

I really appreciate your help.

MG

You may try different algorithms and, if you are lucky, this helps. Typically does not. Then try to solve the steady state analytically (recursively) or solve a simpler version analytically and use these as initial guesses. Good luck!