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.
DLXNoEntreTEST.mod (3.8 KB)
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.
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.
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)
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.
DLX_steadystate.m (4.28 KB)
DLXwithcomments.mod (7.13 KB)