I am having trouble replicating a version of Matteo Iacoviello’s 2005 AER paper “House prices, borrowing constraints and monetary policy”.
I have attempted several versions of the model, and simplified it to the file attached. The steady state is straightforward to calculate analytically.
However, when running it into dynare I get always errors of the type:
SOLVE: maxit has been reached
??? Error using ==> steady_
STEADY: convergence problems
Error in ==> steady at 54
Error in ==> iac_basic at 133
Error in ==> dynare at 132
Any help would be greatly appreciated, as I have no clue whatsoever as to what can be causing these problems.
iac_basic.mod (1.08 KB)