Unable to find steady state but very close to zero residual

Steady state
1

Dear Sir,

I have been working with a macro-finance model of banking, and I have initial values to use for .mod file using external m file with fsolve. When I put these values in the mod file, I get an error.

Impossible to find the steady state (the sum of square residuals of the static equations is 0.0000). Either the model doesn’t have a steady state, there
are an infinity of steady states, or the guess values are too far from the solution

However, as the error above indicates, residuals of the static equations is 0.0000, and for each of the equation, residuals are also very close to zero.

Equation number 1 : 0 : Lambda
Equation number 2 : 4.6721e-05 : M
Equation number 3 : 0 : p
Equation number 4 : -1.4378e-07 : 4
Equation number 5 : -0.00034204 : 5
Equation number 6 : -0.00035898 : 6
Equation number 7 : 5.6498e-06 : 7
Equation number 8 : 0 : y_r
Equation number 9 : 0 : y_lr
Equation number 10 : 0 : y
Equation number 11 : 0 : z_r
Equation number 12 : 0 : z_lr
Equation number 13 : 5.5746e-06 : pi
Equation number 14 : 0 : d
Equation number 15 : 0 : D
Equation number 16 : -3.5213e-07 : 16
Equation number 17 : 0 : 17
Equation number 18 : 0.00072367 : 18
Equation number 19 : -0.0014539 : 19
Equation number 20 : -0.00072975 : 20

What do you think I should do to successfully run the mod file? Does it suggest that there are still errors in my equations? Can I adjust tolerance level to run through this error?

Thank you!

Jeremy

2

Hi Jeremy,

your model does not seem to be too large. Maybe it is possible to derive the steady state analytically, this should be your first cause of action. Then, do you replicate a published model or work with an extension? If it is an extension go back to the model that works and figure out why it may not work anymore.
It does seem odd that the residuals are so small, but doing it with initval is always tricky.

Have you tried steady(solve_algo=2,maxit=5000); or any other solve_algo. You can look them up in the manual in case are not sure.

Cheers.

3

See also "Impossible to find steady state" despite feeding solved analytic steady state values