I have some rather peculiar problems with my Two-Country-Model, particularly with the steady state and determinacy. Depending on which algorithm I use in order to calculate the steady state, Dynare either…

… finds values that are indeed not the correct steady state values (however they are quite close to the true ones) and notifies me that the rank condition is satisfied (solve_algo=0 and solve_algo=1)

… finds the correct steady state values, but warns me that my model is indeterminate (solve_algo=3)

… finds no steady state at all (error message:

“SOLVE: maxit has been reached

Error using steady

STEADY: convergence problems”) (solve_algo=2)

I really can’t imagine what is going on. The initial values are the exact (analytical) steady state values, so the problem can’t possibly stem from poor starting values.

Can anyone help me out? Thank you in advance.

Best,

Juerg