Hello,

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

steady_;

Error in ==> iac_basic at 133

steady;

Error in ==> dynare at 132

evalin(‘base’,fname) ;

Any help would be greatly appreciated, as I have no clue whatsoever as to what can be causing these problems.

Best,

J

iac_basic.mod (1.08 KB)