Dear Dynare Assistants:

I apologize for this additional post over a related question that I asked last time – the model still does not seem to be working. To ease the interpretation of my question, I attached a pdf of the optimization problem I am solving – the social planner’s problem. C is consumption, H is hours worked, E is energy, K is capital.

Fortunately, the steady state seems to be close to convergence. As you suggested, I type a residual command so that each time I run the program I see the residuals. They are quite small:

Equation number 1 : 0.031914

Equation number 2 : 0.015809

Equation number 3 : -0.0434

Equation number 4 : 0.61771

Equation number 5 : 0.16

However, it still does not complete! I tried homotopy, with the commands below, but it did not work; delivered an error that it could not proceed after the first step

homotopy_setup;

sigma_c, 0.5, 5.32;

sigma_h, 0.5, 0.02;

sigma_s, 0.5, 1.33;

end;

steady(homotopy_mode = 1, homotopy_steps = 50);

As always, I appreciate your advice and insight into the problem.

PS, is there an easy way to run the model many times over a series of possible parameter values, i.e. to test the state state under different parameter values of a tax?

planner_toy.mod (1.97 KB)

Dynare forum question.pdf (151 KB)