Hello everyone,

Hello Professor Johannes Pfeifer,

Sorry for bothering you with this question but I would like to get some help regarding a steady state solution of a closed economy TANK (Ricardian and RoT households) DSGE model.

I am able to get the analytical solution of my steady state recursively but unfortunately I am not able to run my mod file and it shows that some equations have non zero residuals and the error reads as follows:

Residuals of the static equations:

Equation number 1 : 0 : Utility

Equation number 2 : -0.038211 : Ur_star

Equation number 3 : 0 : U_star

Equation number 4 : 0 : Welfare

Equation number 5 : 0 : Vr_star

Equation number 6 : 0 : V_star

Equation number 7 : 0 : Marginal Utility

Equation number 8 : 0 : Stochastic Discount factors

Equation number 9 : 0.47274 : FOC - labour supply

Equation number 10 : -0.89363 : 10

Equation number 11 : 0 : FOC - Euler equation - home assets

Equation number 12 : 0 : Capital producers FOC - Euler equation - home assets

Equation number 13 : 0 : Production

Equation number 14 : 0 : Intermediate Firm FOC - capital

Equation number 15 : 0 : Intermediate Firm FOC - labour

Equation number 16 : 0 : Rotemberg price adjsutment

Equation number 17 : 0 : NK Phillips curve

Equation number 18 : 0 : Firm profit = dividend

Equation number 19 : 0 : Aggregate Labour

Equation number 20 : 0 : Capital Producer- foc

Equation number 21 : 0 : Capital adjustment cost

Equation number 22 : 0 : X_star

Equation number 23 : 0 : K_star

Equation number 24 : 0 : Real interest rate

Equation number 25 : 0 : Household consumption, investment and government spending

Equation number 26 : 0 : Cr_star

Equation number 27 : 0 : Government budget deficit

Equation number 28 : -0.14169 : Government budget constraint

Equation number 29 : 0 : Resource Constraint

Equation number 30 : 0.35 : Public bond clearing

Equation number 31 : 0.083145 : Profit clearing

Equation number 32 : 0 : Foreign Interest rate rule

Equation number 33 : 0 : Foreign fiscal policy rule

Equation number 34 : 0 : Shock processes

Equation number 35 : 0 : 35

Equation number 36 : 0 : 36

Equation number 37 : 0 : Ylog_star

Equation number 38 : 0 : Clog_star

Equation number 39 : 0 : Pilog_star

Equation number 40 : 0 : Ilog_star

Equation number 41 : 0 : wlog_star

Equation number 42 : 0 : Nlog_star

Equation number 43 : 0 : Nrlog_star

Equation number 44 : 0 : Nslog_star

Error using print_info

The steadystate file did not compute the steady state

Error in steady (line 102)

print_info(info,options_.noprint, options_);

Error in TANK.driver (line 510)

steady;

Error in dynare (line 281)

evalin(‘base’,[fname ‘.driver’]);

I believe there are inconsistencies in between my steady state and the model equations but unfortunately I am not able to detect the sources.

Could you please help me to solve this issue? Any help is appreciated.

I have attached the mod file, steady state.m file and parameters separately.

console_TANK.m (3.7 KB)

param.mat (2.5 KB)

TANK.mod (10.1 KB)

TANK_steadystate.m (4.2 KB)

Thank you so much in advance

Amare