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
??? Error using ==> steady_
STEADY: convergence problems
Error in ==> steady at 52
Error in ==> mendozarbc1 at 147
Error in ==> dynare at 132
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.
mendozarbc1.mod (2.78 KB)