Steady state consumption provided is reported with large errors. Help

ClimateDSGE_Yi_Aggregate.mod (3.7 KB)

I am beginner of Dynare and code a model with two types of capital. The second capital is provided with taxes. The supply side of the second capital is a linear relation between price and supply (J). I calculate the steady state numerically and manually. However, when I input it into Dynare, the error message reports as “Impossible to find the steady state (the sum of square residuals of the static equations is 0.4248).”. I really don’t know why this could happen. Either it’s an issue of model setting or parameter setting ? I attach my code here. Please help me with it if any one knows what’s wrong with it.


The resid belongs before steady. It will show you that your computed steady state does not solve a few equations. Focus on those.

Thanks jpfeifer. I am very curious about how the residual is generated to be honest, since this might connect to the errors. If you know some references about this, it might be very helpful to share with me. When you say the ‘computed steady state doesn’t fit the few equations’. Is this due to the manual solution ? Or, parameter setting ? Or the equation is wrong over a model. I am asking because I am wondering if it’s possibly due to the calibrated parameter is wrong, therefore contributing to a large error inevitably. I did check the market clearing condition lots of times and it seems no problem (The main issue now is the consumption error from the market clearing condition is too large).

Dynare will simply take your computed initval together with the parameter values and plug them into the entere model equations. If there are residuals, the initial values and the equations do not align. Most often it’s about the steady state computation containing a mistake, but sometimes it’s about mistakes in the model equations.

Professor, I spend time to resolve the issue but met with the other issue. Now all the steady state errors are 0s:
Equation number 1 : 0 : em
Equation number 2 : 0 : 2
Equation number 3 : 0 : sdf
Equation number 4 : 0 : gamma
Equation number 5 : 0 : 5
Equation number 6 : 0 : 6
Equation number 7 : 0 : 7
Equation number 8 : 0 : 8
Equation number 9 : 0 : 9
Equation number 10 : 0 : cm
Equation number 11 : 0 : anew
Equation number 12 : 0 : 12
Equation number 13 : 0 : 13
Equation number 14 : 0 : la
Equation number 15 : 0 : 15
Equation number 16 : 0 : 16
Equation number 17 : 0 : 17
Equation number 18 : 0 : 18
Equation number 19 : 0 : 19
Equation number 20 : 0 : lkd
But the IRF graphs cannot be generated since : Blanchard & Kahn conditions are not satisfied: no stable equilibrium. I am confused about how to fix this issue or should I rewrite another framework completely ? I do check the model_diagnostics(M_,options_,oo_) and the message says that ‘MODEL_DIAGNOSTICS: No obvious problems with this mod-file were detected.’ So, I think there is no colinearity relationship in this system. I am very confused about what I should do next. Should I try with different parameters or rewrite another framework ? BTW, I tried to change some parameters randomly. The best result I could collect is still similar issue with no irf but with a warning:
All endogenous are constant or non stationary, not displaying correlations and auto-correlations. Could you please give me some advice on how to deal with this issue ?

Often this is caused by a timing error.

You can verify in the policy function that the one shock whose variance is not 0 does not affect the variables you selected.

Thanks Professor. It’s exactly as you said. I get it.