The steadystate file did not compute the steady-state

[jpfeifer]

Please use the Taylor rule I used. You cannot use the STEADY_STATE operator on all variables as you will run into the problem described at

An infinity of steady states with Taylor rules

No. Usually, you have a Taylor Rule of the form R/Rbar=(pi/pi_bar)^phi_pi You set pi_bar in the parameter initialization instead of trying to use steady_state(pi). The reason is that steady state inflation is not endogenously determined. Given the value for pi_bar, you use #R_bar=1/beta*pi_bar to set the nominal interest rate. Regarding the peg problem, there often occur problems in open economy model with closing the model. First make sure the model solves for the individual countries. Then,…