Steady state model block in estimation

Steady state
1

I’m trying to estimate a model, but I’m having issues with the steady_state_model-block.
After computing the mode, I get a bunch of warnings from mode_check saying that the model is not solved for certain parameter values. I’ve taken some of those values, and ran simulations, and everything works fine. My guess is that there’s some issue in the updating of the parameters, but I don’t really know how to solve it.
Any help will be much appreciated!

Thanks!
steady_modelV7.mod (17.5 KB)
data_use.mat (22.7 KB)

2

mode_check tries parameters from a rather wide range. Some of them are infeasible. You can easily verify that full habits h_cons=1 do not yield a valid steady state. The displayed messages reflect that.

3

Right! Thanks! But I’m thinking about parameters that should, theoretically, be feasible. For example, zeta is the calvo prob of changing prices, and, a priori, it should work at 0.867, or psi_pi is the central bank’s reaction to inflation, and it should work at 0.909

Also, should I be worried about this messages?

4

Your steady state file contains

piestar                 = ((1-zeta*(pi^(epsilon-1)))/(1-zeta))^(1/(1-epsilon));

As \pi>1 in steady state, the expression (1-zeta*(pi^(epsilon-1)) becomes negative for large values of zeta, resulting in complex numbers.