I am currently working on replicating the model from Heathcote and Perri’s paper “The International Diversification Puzzle is not as bad as you think” (2013) (paper here ) in Dynare using the Devereux-Sutherland method.
kkk.mod (13.1 KB)
I find the steady state, and dynare runs the first order stochastic simulation well. However, when it comes to the second order stochastic simulation it shows the following error message:
Error using print_info (line 83)
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
Error in stoch_simul (line 100)
print_info(info, options_.noprint, options_);
Error in kkk (line 497)
info = stoch_simul(var_list_);
Error in dynare (line 235)
Model diagnostics also says that nothing is wrong with the model. Please help! URGENT!