Spurious Convergence

Hello everyone,

I am a beginner using Dynare and I was trying to replicate Mendoza’s (1991) paper: “Real Business Cycle in a Small Open Economy”. I also took the steady state results from Schmidt-Grohe and Uribe’s (2001) matlab code for this model.

Everything appears to be fine but when I run the model in Dynare, it returns to me the next message:

…Starting MATLAB/Octave computing.

SOLVE: Iteration 14
Spurious convergence.
0.5903
0
0.3977
0
37.7875
1.0000
-608.0700
0
-8.0600
1.0000

??? Error using ==> steady_
STEADY: convergence problems

Error in ==> steady at 52
steady_;

Error in ==> mendozarbc1 at 147
steady;

Error in ==> dynare at 132
evalin(‘base’,fname) ;

I didn’t find any past post related to “Spurious convergence” in Dynare’s forum, so I hope to find some help from you.

I have attached my dynare code.

Best regards.

Marcelo Olguín.
mendozarbc1.mod (2.78 KB)