I have a problem in simulating two-agent open Ramsey model. I have foreign asset accumulation variable, which should be zero at steady-state. Dynare finds the zero steady-state, however, the dynamics are problematic. Eventhough there is no uncertainty or no shocks are implemented to the model and I initially give steady-state levels, the variables, especially the foreign asset accumulation variable, do not stay at the steady-state level. Depending on the parameter values, there is either accumulation or decumulation and it continues to increase to the last period. In the last period it sharply goes to the steady-state level. Is there anyone who has an idea what might be the problem is? I will appreciate any suggestion…
Thank you in advance.