Too many output arguments

Dynare help (legacy posts)
1

Hallo.

I have written an m-file for computing the steady state of my model and it works fine by itself.
However, if I execute the mod file and it automatically accesses the steadystate file it gives me an error saying “Too many output arguments”.
What does that mean? I have the same number of variables in the mod file as I have in the stst-file.

Another question I have concerns the “end of period” stock notation convention of dynare. I can understand why that leads to taking k(-1) when writing the capital accumulation equation. But that will not suffice to get my model running. How do I treat forward-looking variables for the interest rate or the exchange rate? Can I leave them like that or do I push them one period back.

If I do not integrate the stst-file and run the mod file by inserting the values computed by it directly as initvals then there is no convergence.

I would be very thankful if someone could have a look at my code and make some suggestions.

Best regards.
Min-Kyu
DLXNoEntreTEST.mod (3.8 KB)

2

about the end of period notation.
k(t+1) is known at date t.
exchange rate and interest rate at date t+1 are expected values at date t , unlike debt or capital stock.
so they should be ex rate (+1) or R(+1)
that is what my understanding is.

3

Thanks for your reply. I know this problem has already been explained in other threads and also in the FAQs. I think I do understand the general notion behind this.
Nevertheless, it is difficult to decide which t to use in the concrete equations because variables appear in different ts in different equations.

For example, in my model the interest rate would be i(t+1) in the Euler equation but what would it be in the monetary policy rule?

i(t+1)= (…) (1+ibar) or i(t)=(…)(1+ibar) ?

and would you write the interest parity condition as

i(t) = istar(t)+s(t)-s(t-1) or i(t+1)=istar(t+1)+s(t+1)-s(t)?

I know these are probably very trivial questions but I am knew to this and I cannot get anything running before I have sorted this out.

4

Dear Min-Kyu,

  1. your model is too big for expecting somebody to study it without the algebraic derivation of the first order conditions and the meaning of the variables

  2. I think that you confuse two issues around timing. One is the timing convention in Dynare forcing you to use capital on an end of period basis.
    Another one, is how to date variables in an equation. You should think equations as determining variables at the current period (period ‘t’). So, the policy rule sets interest rate of the current period, but the Euler equation determines current consumption as a function of the expectation of another function of future consumption and future interest rate among others.

  3. For the above reason, the policy rule and the process for autoregressive shocks have the wrong timing in your *.mod file. There maybe other errors that I haven’t seen

Kind regards

Michel

5

NOTE THAT THE DEPRECIATION IS ‘EXPECTED’ IN THE UIP CONDITION.
THE INTEREST RATES ARE KNOWN AT DATE T.
SO IT SHOULD BE WRITTEN AS

i(t) = istar(t)+s(t+1)-s(t)

6

Hallo,

Thanks for taking the time to look into my model. I understand that it cannot be grasped just by the code I provided.

The model is taken from “Exchange Rates and Monetary Policy in Emerging Market Economies”, from Michael B. Devereux, Philip R. Lane and Juanyi Xu, Economic Journal, Vol. 116 (April) , page 478-506.

I am only trying to code the model with the help of dynare in order to run some estimations.

Basically the only thing I did was write the equations on the last 2 pages of this Appendix ihome.ust.hk/~jennyxu/EJpapefinal.pdf into a mod file. I got the steady state values from a seperate m-file which runs finely. But I cannot understand why dynare does not get convergence even though I have (in my opinion) reasonable initial values.

I know I am asking a lot but I will still upload the file again with some comments. I hope I have corrected most of the time subscript errors.

Best regards,
Min-Kyu[/code]
DLX_steadystate.m (4.28 KB)
DLXwithcomments.mod (7.13 KB)