Dear all,

I am having trouble with locating the steady state of the enclosed model. It is particularly confusing since the analytical calculation of the steady state is given a nice exposition in ABC’s of RBC’s and I have simply put these values into the initval block. However, dynare reports that one of the equations has a residual of ~ 0.3. Any pointers for this beginner would be extremely appreciated.

Jake.

hansens_rbc.mod (692 Bytes)