Thank you for your reply. But i dont understand that when i run the model without steady state file, resid(1) gives for all equations zero. It gives this result.

Configuring Dynare …

[mex] Generalized QZ.

[mex] Sylvester equation solution.

[mex] Kronecker products.

[mex] Sparse kronecker products.

[mex] Local state space iteration (second order).

[mex] Bytecode evaluation.

[mex] k-order perturbation solver.

[mex] k-order solution simulation.

[mex] Quasi Monte-Carlo sequence (Sobol).

[mex] Markov Switching SBVAR.

Starting Dynare (version 4.3.1).

Starting preprocessing of the model file …

Found 23 equation(s).

Evaluating expressions…done

Computing static model derivatives:

- order 1

Computing dynamic model derivatives:
- order 1

Processing outputs …done

Preprocessing completed.

Starting MATLAB/Octave computing.

STEADY-STATE RESULTS:

c 0.150095

h 0.179761

lamda 275.756

a 1

g 1.01

k 0.292417

d 0.007

i 0.0396226

r 0.105919

y 0.211472

k_over_gh 1.61059

v 1

s 0.0211472

mu 1

gy 1.01

gc 1.01

gi 1.01

tb 0.000607129

tby 0.00287096

gy_obs 1.01

gc_obs 1.01

gi_obs 1.01

tby_obs 0.00287096

Residuals of the static equations:

Equation number 1 : 0

Equation number 2 : 0

Equation number 3 : 0

Equation number 4 : 0

Equation number 5 : 0

Equation number 6 : 0

Equation number 7 : 0

Equation number 8 : 0

Equation number 9 : 0

Equation number 10 : 0

Equation number 11 : 0

Equation number 12 : 0

Equation number 13 : 0

Equation number 14 : 0

Equation number 15 : 0

Equation number 16 : 0

Equation number 17 : 0

Equation number 18 : 0

Equation number 19 : 0

Equation number 20 : 0

Equation number 21 : 0

Equation number 22 : 0

Equation number 23 : 0

Loading 105 observations from arj_data.m

SOLVE: maxit has been reached

SOLVE: maxit has been reached

SOLVE: maxit has been reached

Error in computing likelihood for initial parameter values

Error using print_info (line 57)

Impossible to find the steady state. Either the model doesn’t have a unique

steady state of the guess values are too far from the solution

Error in initial_estimation_checks (line 69)

print_info(info, DynareOptions.noprint)

Error in dynare_estimation_1 (line 147)

oo_ =

initial_estimation_checks(objective_function,xparam1,dataset_,M_,estim_params_,options_,bayestopt_,oo_);

Error in dynare_estimation (line 70)

dynare_estimation_1(var_list,dname);

Error in uribefinansestson (line 328)

dynare_estimation(var_list_);

Error in dynare (line 120)

evalin(‘base’,fname) ;

But with the steady state file, it gives errors for equations 6,7 and 10 and residuals of the static equations are different from zero? What is the reason behind this? May it stem from MCMC algorithm which uses different initial point for each draw? In simulation part, it works with steady state file. I really appreciate all answers. Thanks.