I am trying to replicate a small open economy RBC model (info below).

Although I am using steady state values as the initial values Dynare cannot seem to find a solution

producing the following -usual- error:

```
SOLVE: maxit has been reached
??? Error using ==> print_info at 52
Impossible to find the steady state. Either the model doesn't have a unique steady state of the guess values are
too far from the solution
```

The model uses exact calibration values for the parameters in the paper.

The code is shown below. I would appreciate any help. Thanks.

[code]% RBC model for Argentina

% see J. Garcia-Cicco et al. (2010) “Real Business Cycles in Emerging Countries?”

close all

%----------------------------------------------------------------

% Defining variables

%----------------------------------------------------------------

var y c h k tb r d inv lm rp a g;

% NOTE: lm: lagrange multiplier

% rp: country risk premium

varexo e_a e_g;

parameters alpha theta beta omega psi phi gamma delta rstar dbar gbar rho_a rho_g sigma_a sigma_g;

%----------------------------------------------------------------

% 2. Calibration

%----------------------------------------------------------------

alpha = 0.32;

theta = 2.24;

omega = 1.6;

phi = 3.3;

psi = 0.001;

gamma = 2;

delta = 0.1255;

beta = 0.9224;

dbar = 0.007;

gbar = 1.005;

rstar = 1/beta*gbar^gamma-1;

rho_a = 0.765;

sigma_a = 0.027;

rho_g = 0.828;

sigma_g = 0.03;

%----------------------------------------------------------------

% 3. Model

%----------------------------------------------------------------

model;

lm = (c-theta*h^omega/omega)^(-gamma);
rp = psi*(exp(d(-1)-dbar)-1);

r = rstar + rp;

tb = y - c - inv - ((phi/2)

*(g*k/k(-1)-gbar)^2)

*k(-1);*

dg/(1+r) = d(-1)-tb;

d

inv = k

*g-(1-delta)*

thetah^(gamma-1) = exp(a)

*k(-1);*

y = exp(a)h)^(1-alpha);y = exp(a)

*k(-1)^alpha*(gtheta

*(1-alpha)*

lmg^gamma = (beta)

*g^(1-alpha)*(k(-1)/h)^alpha;lm

*(1+r)*(g(+1)

*lm(+1);*

(g^gamma)((k/k(-1))(g^gamma)

*lm*(1+phi*g-gbar)) = (beta)*exp(a(+1))*lm(+1)*(1-delta+alpha*h(+1)/k)^(1-alpha)*

+phi(k(+1)/k)

+phi

*g(+1)*((k(+1)/k)

*g(+1)-gbar)-0.5*phi*((k(+1)/k)

*g(+1)-gbar)^2);*

a = rho_aa(-1) + e_a;

a = rho_a

log(g) = (1-rho_g)

*log(gbar) + rho_g*log(g(-1)) + e_g;

end;

%----------------------------------------------------------------

% 4. Computation

%----------------------------------------------------------------

initval;

y = 0.2217;

c = 0.1791;

h = 0.1851;

k = 0.3217;

r = rstar;

d = dbar;

inv = 0.042;

tb = y-c-inv;

lm = 138.3395;

rp = 0;

a = 0;

g = gbar;

end;

shocks;

var e_a = sigma_a^2;

var e_g = sigma_g^2;

end;

check;

resid(1);

steady(solve_algo=3);[/code]