Steady state computation

General DSGE Modeling Replication Attempts
1

Hi
I am trying to replicate Guajardo (2008) paper in Dynare.
Attached herewith is the mod file and the steady state file.

The computation gives an error that steady state file did not compute the steady state.
While going through the previous posts, I realized that the non zero residuals imply that the equations might be incorrect. I have checked for the equations as well and didn’t find any mistake.

Could it be because of some other reason why some of the equations do not have non-zero residuals?
Can you suggest a fix for this problem?
guajardo2008_steadystate.m (2.73 KB)
guajardo2008.mod (4.2 KB)

2

In this case you need to check your steady state computation. Why are you allowed to fix

H = 0.27;?

3

Many thanks for your early reply.

The problem, that I run into after putting HX as model determined and H = HX+HN, is that I am running into circles.

With HX being a function of CM, and CM being a function of HN, and HN function of H (i.e. HX+HN)
Thus, there is no computation possible as one of the variables remains not defined in one of the steady state equations.

Could you please suggest a possible solution to this?

4

Try looking at the bigger picture. You must have as many equations as unknowns. If that is not the case, your doing something wrong.