Steady State with low level of capital

Steady state
1

Hello,

I am trying to use DYNARE in programming the implementation of Social health insurance using basic OLG model. Well, I used fsolve to find steady state level of capital. It appeared to be relatively small. Anyaway, I used the value I got and run DSGE and I got:

STEADY-STATE RESULTS:

y 0.542482
r 1.24994
w 0.379737
c1 0.129723
c2 0.258878
m1 0.0324309
m2 0.117795
i 0.0182803
s 0.126446
k 0.130202
z 1.11022e-16
MODEL_DIAGNOSTICS: No obvious problems with this mod-file were detected.
Error using print_info (line 45)
Blanchard Kahn conditions are not satisfied: indeterminacy

Error in stoch_simul (line 95)
print_info(info, options_.noprint, options_);

Error in DSGE3 (line 247)
info = stoch_simul(var_list_);

Error in dynare (line 223)
evalin(‘base’,fname) ;
DSGE3.mod (5.0 KB)

Could the low level of capital be a problem for this?

2

It is possible, if there are multiple steady states. However, a timing error in the equations is more likely.

3

Thank you ! I think I’ve found the mistake in equations’ timing.
Best regards,
Galym

4

Hello there,

I am recently working on my degree thesis which has a related topic on social welfare, may I refer to your manuscript or the code for your model?

Best
Wu