I am trying to solve a Kiyotaki-Moore type credit constraint model with variable capital and labor leisure choice.
When I try to solve the stationary version of the equations, I get an error that says “STEADY: Convergence problems”.
However, the same parameter choices renders a solution if I solve it using Uhlig Toolkit.
I would appreciate any help or suggestions.
Please, post or send me the example. It is almost impossible to answer such questions without the *.mod file.
The error message that you get means that Dynare can’t compute the steady state before taking the linear approximation. How do you communicate the steady state to Uhlig’s toolkit?
Here is the .mod file. In the Uhlig program, I first solve the steady state equations to get the calibrated parameters. In the .mod file I am using those calibrated values and the initval. are the steady state values.
sudden.mod (1.84 KB)
Sorry for the late answer. I think that you are missing constants in the autocorrelated processes for r g z and phi.
The way that it is written now, these four variables have mean zero, but that doesn’t make sense in view of the first equations.