Hello!
I am trying to replicate a model by Anand and Prasad(2010) for a class project but I am struggling to compute the steady state values. I keep getting the following error and frankly, I am at a loss as what to do.
STEADY: The Jacobian contains Inf or NaN. The problem arises from:
STEADY: Derivative of Equation 8 with respect to Variable Ctf (initial value of Ctf: 2)
STEADY: Derivative of Equation 8 with respect to Variable Cts (initial value of Cts: 2)
STEADY: Derivative of Equation 8 with respect to Variable xst (initial value of xst: 0)
STEADY: Derivative of Equation 9 with respect to Variable xst (initial value of xst: 0)
STEADY: The problem most often occurs, because a variable with
STEADY: exponent smaller than 1 has been initialized to 0. Taking the derivative
STEADY: and evaluating it at the steady state then results in a division by 0.
Practically a new student at Dynare! Any help is deeply appreciated!
Thanks
diss3.mod (1.32 KB)
Recheck both the model equations and the initval block:
- In the initval block
xst=(theta/theta-1)*mct;
the mct is not defined yet and there is a bracket missing as otherwise the bracket always evaluates to 0
2. Aft(+1)=rhoaf*Aft + epsxi;
has a problem with timing (it should be lagged by one period) and should be in logs. Currently the equations has steady state Aft=0, but that
is incompatible with e.g.
xft=phin*((yft)^(psi))*((Ctf)^(sigma))*((Aft)^(-1-psi));
where Aft must be 1
Thanks for the help. I made the aforementioned corrections yet I am still not able to calculate the steady state values. Is there anyway that can be bypassed on Dynare and still generate the required results? I am getting the following error:SOLVE: maxit has been reached
[quote]Residuals of the static equations:
Equation number 1 : 0.12723
Equation number 2 : 0.0096714
Equation number 3 : 0.14266
Equation number 4 : 0.22491
Equation number 5 : 0
Equation number 6 : 0.54044
Equation number 7 : 0.25168
Equation number 8 : 0.12782
Equation number 9 : -0.039531
Equation number 10 : 0
Equation number 11 : 1.8909
Equation number 12 : 0
Equation number 13 : 0
Equation number 14 : 0
Equation number 15 : 0
Error using print_info (line
74)
Impossible to find the steady
state. Either the model
doesn’t have a steady state,
there are an infinity of
steady states, or the guess
values are too far from the
solution[/quote]
I attached the file and the equations I am trying to replicate. Any assistance is deeply appreciated. I am in need of dire help! 
relevant equations.pdf (149 KB)
diss3.mod (1.38 KB)
One of the problems in your mod-file is that there is no unique steady state, making it impossible to use a solver the way you do. The first issue is the collinearity in the Taylor rule, see [An infinity of steady states with Taylor rules)
I would strongly recommend computing the steady state analytically-