Syntax Error in Model Block

Stochastic simulations
27 
lambda = betta*lambda(+1)*(1-tau_k)*r(+1) + (1-delta_p);

needs to be

lambda = betta*lambda(+1)*((1-tau_k)*r(+1) + (1-delta_p));
28

I see it. The IRF graphs are beginning to make sense. I still have “gc” and “gi” to specify into my model block, even though I am finding it difficult but I will persist, once I am done with it, I can then introduce the main shock I am testing into the model.
Thank you Prof.

29

I see it. The IRF graphs are beginning to make sense. I still have “gc” and “gi” to specify into my model block, even though I am finding it difficult but I will persist, once I am done with it, I can then introduce the main shock I am testing into the model.
Thank you Prof.

30

Dear Johannes,

I am trying to introduce govt consumption into my model by adding it in the preamble and in the model block. In my model block, I specified govt cons as “gc=gc^y^y” but the output is spurious. Everything seem okay before now but with the introducing gc is resulting to errors in dynare. Please how do I overcome this?

31

The equation you mention has no meaning for other people as they neither know the model nor the notation. That being said, a double exponent almost never makes sense. Have a look at DSGE_mod/RBC_baseline.mod at master · JohannesPfeifer/DSGE_mod · GitHub how it introduces government consumption.

32

Thank you Prof. I will study the above code before trying to implement into mine.

33

Hello Prof,

I studied your code, and I did specify “gc” and “gi” just the way you did in your code but I did run into multiple errors. See the attached code.
edit.mod (1015 Bytes)

34

How do I overcome the errors please?

35

I also noticed in your model block, there is no equation specifying market clearing.

36

No, you did not follow my code.

  1. The specification
gc=rhogc*gc(-1)+eps_gc;
gi=rhogi*gi(-1)+eps_gi;

implies that both are 0 in steady state. In my code, you have gshare*exp(gc)-
2. A=0 is not a valid steady state when using log(A)

37

Hello Prof,

I have introduced epsR into my model, but I am running into error messages. See below

Error using print_info (line 32)
Impossible to find the steady state (the sum of square residuals of the static equations is 0.0015). Either the
model doesn’t have a steady state, there are an infinity of steady states, or the guess values are too far from
the solution

Error in steady (line 102)
print_info(info,options_.noprint, options_);

Error in izzy1.driver (line 292)
steady;

Error in dynare (line 293)
evalin(‘base’,[fname ‘.driver’]) ;

See attached the code
izzy1.mod (1.6 KB)

Please how do I overcome this?

38

Are you sure a steady state exists in this case? R is huge compared to output.

39

Okay. Thanks for your response.

I reduced R when compared to output, however there is no IRF for orthogonalized shock to epsR. The variance decomposition shows this below;

VARIANCE DECOMPOSITION (in percent) (HP filter, lambda = 100)
epsA epsR
y 100.00 0.00
c 100.00 0.00
h 100.00 0.00
I 100.00 0.00
k 100.00 0.00
kg 100.00 0.00
w 100.00 0.00
r 100.00 0.00
gc 100.00 0.00
Ig 100.00 0.00

Please can you advice me on how to resolve this?

Thank you Prof.

40

Please provide the updated version of the file.

41

Okay. This is it.

izzzzy.mod (1.2 KB)

Thanks Prof.

42

You can verify in the decision rules that the shock only affects R and nothing else. So you setup must be causing this.

43

Thank you Prof. Will do my reading. DSGEs can be really frustrating for beginners.