Hello, I am trying to make a DSGE model with Search frictions and Dynare tells me that it can’t solve the steady state. Nevertheless, I already reviewed the equations and all of them have zero residuals when they are evaluated at steady state. Can you orientate me on this? I attach my model code.
Thank you very much for your help
Residuals of the static equations:
Equation number 1 : 0
Equation number 2 : 0
Equation number 3 : 0
Equation number 4 : 0
Equation number 5 : 0
Equation number 130 : 0
Equation number 131 : 0
Error using print_info (line 72)
Error in steady (line 92)
Error in Search_BCU_prueba3_sinCL (line 1492)
Error in dynare (line 180)
Search.mod (42.2 KB)
The problem is circular definitions of parameters in the
steady_state_model-block. The correct order needs to be
R_ss = a_ss*pi_ss/BETTA; %(EE.1)
Rreal_ss = R_ss/pi_ss;
Otherwise, you will rely on an old value of
R_ss when computing
Thank you very much for your response!!
Dear Mr Pfeifer,
I am facing another problem with this model: the rank condition isn’t verified. I’ve already run the model_diagnostics and nothing comes out. I also checked if there is a timing problem but I don’t see anything. What else can be wrong? Thank you in advance for your response. I am running the model with Dynare 4.4.3.
There are 42 eigenvalue(s) larger than 1 in modulus
for 41 forward-looking variable(s)
The rank condition ISN’T verified!
Error using print_info (line 42)
Blanchard Kahn conditions are not satisfied: no stable equilibrium
Error in stoch_simul (line 98)
print_info(info, options_.noprint, options_);
Search_BCU_sinCL.mod (42.0 KB)