Steady State Issue in Two-Agent Model

Stochastic simulations
1

Hello, everyone,

I am a beginner learning DSGE modeling and how to implement it using Dynare. Currently, I am studying and attempting to simulate a two-agent model that incorporates real estate and debt. However, I keep encountering the error: “The steady state file did not compute the steady state.”

I have reviewed my model and equations multiple times, and there are no issues with the model itself. However, the residuals remain between 0 and 1 for three of the equations. Could incorrectly specified parameter values cause this problem, or is it for another reason? If so, how can I resolve this issue?

I have attached my mod files for reference. Any help or guidance would be greatly appreciated.

Thank you so much!
solvess_all_rev.m (1.5 KB)
solvess_rev.m (700 Bytes)
test_debt.mod (5.9 KB)

2

Parameter values cannot cause this. There must be an inconsistency between the entered equations and the steady state equations you use.

3

Professor jpfeifer,

Thank you so much for your response. Are you suggesting that I should re-examine whether the FOCs and equilibrium equations were derived incorrectly from the beginning? Or could the issue be with the model itself?

4

As I said, the steady state and the model equations are inconsistent. This is a matter of the entered codes. There may still be issues with the model itself, but at the stage of steady state finding that would not show up.

5

Professor jpfeifer,

Thank you very much for your response. As you suggested, I revisited the equilibrium equations in my code and discovered some errors in the calculations and incorrect inputs. After correcting these issues, the residuals for the relevant equations are now zero. I sincerely appreciate your help.