Hello,
I am running the following code from Productivity shocks and monetary policy in a two-country model by Tae-Seok and Jang Eiji Okano. The problem I get is
[quote]Warning: Some of the parameters have no value (rho) when using steady. If these parameters
are not initialized in a steadystate file, Dynare may not be able to solve the model… [/quote]
. I understand that rho is not defined numerically among the parameters however,this is the code that the authors made public at dynare.org/wp-repo/dynarewp029.pdf. What am I doing wrong and why do they not give rho a value? Furthermore, even if I try giving rho a value, why does it give the same error?
Thank you,
var x pi_H r pi x_star pi_F_star r_star pi_star r_bar r_bar_star a a_star mc mc_star y y_star y_bar y_bar_star
p p_star e s q;
varexo m m_star xi xi_star;
parameters sigma eta beta theta_H theta_F alpha varphi kappa_H kappa_F omega_2 omega_4 psi varsigma delta
sigma_omega oomega_2 rho rho_star phi_pi phi_pi_star phi_x phi_x_star varrho varrho_star;
sigma = 4.5;
eta = 2.5;
beta = 0.99;
theta_H = 0.9;
theta_F = 0.75;
alpha = 0.6;
kappa_H = (1-theta_H)*(1-theta_H*beta)/theta_H;
kappa_F = (1-theta_F)*(1-theta_F*beta)/theta_F;
varphi = 3;
omega_2 = alpha*2*(1-alpha)*(sigma*eta-1);
omega_4 = alpha*4*(1-alpha)*(sigma*eta-1);
psi = (omega_4+1)*(1+varphi);
varsigma = (omega_2+1)*sigma+(omega_4+1)*varphi;
delta = (sigma^2)*(2*omega_2+1)+2*sigma*varphi*(omega_2+1)*(omega_4+1)+(omega_4+1)^2*varphi^2;
sigma_omega = (omega_2+1)*sigma/(omega_4+1);
oomega_2 = alpha*sigma*(1+varphi)*(varsigma+omega_2*sigma)/delta;
rho_star = 0.55;
phi_pi = 1.5;
phi_pi_star = 1.5;
phi_x = 0.5;
phi_x_star = 0.5;
varrho = 0.4;
varrho_star = 0.4;
rho = 0.9;
model (linear);
x = x(+1)-(omega_4+1)/((omega_2+1)*sigma)*r+(omega_4+1)/((omega_2+1)*sigma)*pi_H(+1)
+omega_2/(omega_2+1)*x_star(+1)-omega_2/(omega_2+1)*x_star+(omega_4+1)/((omega_2+1)*sigma)*r_bar;
pi_H = beta*pi_H(+1)+kappa_H*varsigma/(omega_4+1)*x+kappa_H*omega_2*sigma/(omega_4+1)*x_star
+kappa_H*r;
x_star = x_star(+1)-(omega_4+1)/((omega_2+1)*sigma)*r_star+(omega_4+1)/((omega_2+1)*sigma)*pi_F_star(+1)
+omega_2/(omega_2+1)*x(+1)-omega_2/(omega_2+1)*x+(omega_4+1)/((omega_2+1)*sigma)*r_bar_star;
pi_F_star = beta*pi_star(+1)+kappa_F*varsigma/(omega_4+1)*x_star+kappa_F*omega_2*sigma/(omega_4
+1)*x+kappa_F*r_star;
r = varrho*r(-1) + (1-varrho)*phi_pi*pi + (1-varrho)*phi_x*x + m;
r_star = varrho_star*r_star(-1)+(1-varrho_star)*phi_pi_star*pi_star+(1-varrho_star)*phi_x_star*x_star+m_star;
r_bar = -sigma*(1-rho)*psi*((omega_2+1)*varsigma-omega_2^2*sigma)/((omega_4+1)*delta)*a
-sigma*(1-rho)*omega_2*psi*(varsigma-sigma*(omega_2+1))/((omega_4+1)*delta)*a_star;
r_bar_star = -sigma*(1-rho)*psi*((omega_2+1)*varsigma-omega_2^2*sigma)/((omega_4+1)*delta)*a_star-
sigma*(1-rho)*omega_2*psi*(varsigma-sigma*(omega_2+1))/((omega_4+1)*delta)*a;
pi = pi_H+alpha*sigma/(omega_4+1)*x-alpha*sigma/(omega_4+1)*x(-1)-alpha*sigma/(omega_4+1)*x_star
+alpha*sigma/(omega_4+1)*x_star(-1)+oomega_2*a-oomega_2*a(-1)-oomega_2*a_star+oomega_2*a_star(-1);
pi_star = pi_F_star+alpha*sigma/(omega_4+1)*x_star-alpha*sigma/(omega_4+1)*x_star(-1)
-alpha*sigma/(omega_4+1)*x+alpha*sigma/(omega_4+1)*x(-1)+oomega_2*a_star-oomega_2*a_star(-1)-oomega_2*a
+oomega_2*a(-1);
mc = varsigma/(omega_4+1)*x + omega_2*sigma/(omega_4+1)*x_star + r;
mc_star = varsigma/(omega_4+1)*x_star + omega_2*sigma/(omega_4+1)*x + r_star;
y_bar = varsigma*psi/delta*a - omega_2*sigma*psi/delta*a_star;
y_bar_star = varsigma*psi/delta*a_star - omega_2*sigma*psi/delta*a;
y = x + y_bar;
y_star = x_star + y_bar_star;
p = pi + p(-1);
p_star = pi_star+ p_star(-1);
s = sigma/(omega_4+1)*y - sigma/(omega_4+1)*y_star;
q = (1-2*alpha)*s;
e = q - p_star + p;
a = rho*a(-1) + xi;
a_star = rho_star*a_star(-1) + xi_star;
end;
initval;
x = 0;
pi_H = 0;
r = 0;
pi = 0;
x_star = 0;
pi_F_star = 0;
r_star = 0;
pi_star = 0;
xi = 0;
xi_star = 0;
end;
steady;
check;
shocks;
var xi_star;
stderr 1;
end;
stoch_simul(periods=2100);